Report: Cable in Decline — Online Viewing to Blame?

SNL Kagan reports 119,000-subscriber drop in third quarter

U.S. multichannel subscribers fell by 119,000 customers in the third quarter of 2010 — a second consecutive quarterly loss that may reflect the rise of online video, according to an analysis by research firm SNL Kagan. 

Senior analyst Ian Olgeirson cited the weak economy, high unemployment, and "elevated churn of former over-the-air households" — customers who signed up for cable for the first time last year because of the digital transition, and then decided to give it up. 

"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,” Olgeirson said.

"Over-the-top substitution" refers to customers disconnecting their multichannel service in favor of Netflix, Apple TV, or other services. Multichannel subscribers are customers for cable, satellite and video providers such as Verizon FiOS and AT&T U-verse. 

In the second and third quarters combined, the segment fell 2.3 percent to just more than 100 million subscriptions.

In contrast to the third-quarter drop, there was a 346,000 gain in subscribers in the third-quarter of 2009. 

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