2010 TelcoTV, Las Vegas--The dust has settled from the latest round of earnings reports and, frankly, judging from what executives and some pundits are saying, the cable industry is in a deep state of denial.
With four of the five cable companies reporting results (Cox doesn't share the data publicly), cable has lost more than a half million subscribers in the third quarter, and more than 1.2 million in the past two quarters.
Here's the run down:
Comcast, the nation's largest MSO was out 275,000 subscribers in the third quarter, more subscribers than it's ever lost before and more than double its losses a year ago.
Time Warner Cable saw 155,000 subscribers flee, also doubling its losses from the like quarter a year ago.
Add in the losses from Charter (63,800) and Cablevision (24,500... and that was before the public debacle of it losing access to a variety of Fox networks as it squabbled with News Corp. over retransmission fees), and the total comes in at 518,300.
Both the satellite and telco sector showed strong gains, meanwhile, which pretty much sweeps the cable industry's economy arguments out the door.
Verizon added 204,000 subscribers, AT&T some 236,000.
Satellite pay-TV providers DISH Network and DirecTV were a bit of a mixed bag with DirecTV adding 174,000 subscribers in the quarter and Dish losing 29,000.
In all, the net gain for the pay-TV industry was about 67,000, but, as Will Richmond of VideoNuze points out, if Cox and the smaller cable companies trend with their brethren, the industry likely has its second quarter in a row of losses, albeit just a fraction of the 216,000 it reported in Q2.
So, if it's not just the economy, and let's assume for the moment that it isn't, what's really happening?
Altman, Vilandre & Co. analyst Jonathan Hurd, during a Streaming Media West panel last week in Los Angeles, said that more than twice as many people as a year ago (about 15 percent), reported they watched some online video this year--it is, admittedly, a small increase, but it's significant because it continues a steady climb for online video viewing.
And, said John Paul, EVP for Sling Media, it's a trend he believes will continue, pushing more TV viewers over the top, or at least out of the current linear model.
"This (a shift over the top) is happening, and content guys can't change it," Paul said. "Companies have to adapt. What is good for the industry is that Internet video is cheap, even cheaper than laying fiber. It's up to the distribution side of the industry to come up with new models and not fight it."
Greg Kampanis, South Park Digital Studio's SVP of content strategy, said the pace with which most operators are moving toward TV Everywhere--slowly--creates a conundrum for content providers: while they'd rather be behind an authenticated pay wall, they're losing viewers as DVD sales decline, and that's causing them to give over-the-top delivery, in some form, another look.
"We need to do something or we're losing those viewers to Bittorrent or illegal sites," he said.
Sling Media's Paul said he believes linear programming will soon be a thing of the past and that, increasingly, users will look to IPTV delivery to meet their entertainment needs. "It's just a matter of when," he said. "As we transition to IPTV, it will be on demand."
For the cable and satellite industry, that means accelerating its move to Internet video--or moving over as telcos, big and small, take the lead.
I'll be at TelcoTV in Vegas this week where, according to all the press releases and pre-show chats I've had, much of the focus is going to be on over-the-top delivery. What do you think? Drop me a line. -Jim