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SNL Kagan: Over the top does hurt

Wed, 11/17/2010 - 7:27am
Brian Santo

SNL Kagan has looked at the numbers and sees some cord-cutting.

At the same time, another survey says that consumers prefer paid content over free over-the-air content, and yet a third quantifies how very many people are watching video on some device other than a traditional TV.

At this point, everybody in the MVPD universe is aware that cable has lost subscribers for two quarters in a row, with a few hundred thousand subscribers switching to DBS or telco TV service.

But not all of the customers abandoning cable left for a competitive service. In the second quarter, the entire multichannel video programming distributor (MVPD) market declined for the first time in history, losing a total of 216,000 customers. In Q3, the MVPD market lost another 119,000 subs.

In the past two quarters combined, the segment has fallen 2.3 percent to just more than 100 million subscriptions (not eliminating overlap of duplicate subscriptions), according to Kagan's estimates.

Cable operators insist that the main reasons for the losses are due largely to the troubled economy. While that may be true to a large extent, Kagan senior analyst Ian Olgeirson says that's not the whole story.

"Operators are pointing to a continuation of the forces that pushed subscriber gains into negative territory in the second quarter, including the weak economy, high unemployment and elevated churn of former over-the-air households," Olgeirson said. "However, it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages."

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