U.S. Cable Operators Narrow Subscriber Losses in Q3

EL SEGUNDO: Cable operators in the U.S. lost 460,000 video subscribers in Q3, compared to a reduction of 512,000 seen in the third quarter a year ago, according to IHS, but OTT services and the general economy are still taking their toll on the industry as a whole.

According to an IHS Screen Digest Television Intelligence Report, Q3 marked the best third-quarter performance for U.S. cable operators in terms of video subscribers in at least two years. The loss of 460,000 subs compares to the 739,000 subscribers lost in the same period in 2010. It also represents an improvement compared to the 599,000 drop in net subscriber additions in Q2 2012.

However, as cable operators’ promotions for the fourth quarter in 2011 begin to expire, subscriber losses are expected to rise. For the full year, subs are forecast to shrink to 56.6 million, which is a decrease of 3 percent from 2011. If so, 2012 will mark the ninth consecutive year of declines in the U.S. cable market.

Along with the sluggish economy, the losses are attributed to competition from IPTV services, which continue to eat into cable companies’ opportunity to add new households to their roster.

“U.S. cable operators in the third quarter trimmed their video subscriber losses by using heavy promotional bundles as well as service initiatives such as TV Everywhere, which offers features like live linear streaming of cable networks in-home and video-on-demand service in and out of home, through the open Internet,” said Erik Brannon, an analyst for television research at IHS. “However, subscriber numbers still decreased in the third quarter because the attractiveness of Over-The-Top (OTT) services delivered over the open Internet, and an ailing economy also dissuaded a portion of new households from even considering taking a pay-TV subscription. These new households that are eschewing pay-TV in favor of OTT—which could be called ‘cord nevers,’ rather than ‘cord cutters’—represent a lost segment of the market for pay-TV operators.”