Report: Cord-Cutting to Reach 4.5 Million Households by Year-End

MONTEREY: An estimated 4 percent of U.S. households, representing 4.5 million homes, will have cut the cord on their subscription cable services in favor of over-the-top (OTT) alternatives by the end of 2011, reports SNL Kagan, which forecasts a continued rise in cord-cutting over the next five years.

The analyst says that OTT customers "impacted the subscriber counts for multichannel service providers in 2010," with 2 percent cutting the cord, representing 2.5 million homes. Internet-based alternatives such as Hulu, Netflix, iTunes and Amazon are "expected to exert competitive pressure going forward," according to SNL Kagan.

In a five-year forecast, multichannel subscription via OTT delivery is expected to grown from 2.5 million at the end of 2010 to 12.1 million homes by 2015. This would mean 10 percent of occupied homes would cut chords.

Although, the report does say that cable and satellite companies may still add pay-TV subscribers. SNL Kagan says that "the pace is not expected to keep up with occupied household formation." In 2009, about 86 percent of all homes subscribed to pay TV, though that number dipped to 84.9 percent for 2010.