SNL Kagan reported that multichannel (cable, satellite and telco) video subscribers dropped for the second straight quarter, falling by 119,000 in the third quarter.
When SNL Kagan reported a similar, and first ever drop for the 2nd quarter, it was fairly quick to dismiss cord cutting. But despite the tiny numbers, with two consecutive quarters of drops, now even SNL Kagan isn't being dismissive.
[I]t 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.”
"Over the top substitution" is just fancy people talk for cord cutting. There are the counter claims: Nielsen, for example recently commissioned a study that showed people who watched online video were big watchers of regular TV. And there's also some data to support the notion that the people who are cutting the cord aren't running to replace it with Netflix and other alternatives. They're replacing it with...food on the table.
But consecutive quarters of decreases is still consecutive quarters of decreases...
Here's the full release from SNL Kagan:
SNL Kagan Analysis Shows U.S. Multichannel Video Subscribers Drop for Second Straight Quarter
The multichannel universe fell by 119,000 customers in the third quarter, heightening concerns about vulnerability to over-the-top substitution.
Monterey, Calif. (November 17, 2010) –According to SNL Kagan’s analysis of cable, DBS and telco video offerings, the U.S. multichannel segment fell by 119,000 customers in the third quarter of 2010, compared to a 346,000 gain reported in third-quarter 2009.
SNL Kagan estimates U.S. cable operators lost 741,000 basic video customers in third-quarter 2010, marking the single largest quarterly dip for cable since SNL Kagan began compiling data for the segment in 1980. Cable MSO's share of combined video subscribers continues to slide, dropping to 60.3%, versus 62.9% in third-quarter 2009.
Despite the overall weakening in multichannel subscription trends, the telco TV industry remains on a growth trajectory, adding 476,000 customers in the third quarter. Although still a modest 6.4%, telco market share is steadily rising, up from 4.7% in third-quarter 2009. The DBS industry, which added 145,000 subscribers in the third quarter, is expanding its market share slightly, up less than 1% over the past year to 33.2%.
The third-quarter multichannel market drop-off marks the second consecutive quarter of video subscriber declines. The multichannel market declined for the first time in history when it lost 216,000 customers in the second quarter of 2010. In the past two quarters combined, the segment has fallen 2.3% to just more than 100 million subscriptions, not eliminating overlap of duplicate subscriptions.
“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,” said Ian Olgeirson, senior analyst at SNL Kagan. “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.”
Surviving and thriving in a competitive multichannel landscape will be the focus of this year’s SNL Kagan Cable MSO Summit, to be held on Thursday, November 18, 2010, at the Sentry Center Midtown East in New York City. To register, or for more information, please visit www.snlcenter.com/KaganMSO or call +1.434.951.7786.
Multichannel subscriber data is available exclusively as part of the SNL Kagan Unlimited Information Service. For more information, contact SNLKaganSales@snl.com or +1.866.296.3743.
About SNL Kagan
SNL Kagan, a division of SNL Financial LC, is a comprehensive resource for financial intelligence in the media and communications sector, including the broadcasting, cable, entertainment, motion picture, telecom, wireless, satellite, publishing and new media industries. The SNL Kagan suite of products integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. For more information, visit www.snlkagan.com.