Report: OTT fuels cable's ongoing subscriber losses

Over-the-top (OTT) video offerings, a stagnant economy and ongoing and new competition from outside sources such as IPTV players are combining to hammer the cable industry's subscriber base, the most recent Television Intelligence Report from IHS Screen Digest found.

"The good news for U.S. cable operators in 2012 is that they posted their best third-quarter performance in terms of video subscribers in at least two years," a press release by the analytics firm stated. "The bad news is that the operators still lost nearly half a million subscribers during the period."

Primary reasons for the subscriber loss were the ongoing competition from Verizon (NYSE: VZ) FiOS and AT&T (NYSE: T) U-verse, both of whom added subscribers during the same time period, and "the attractiveness of over-the-top (OTT) services delivered over the open Internet and an ailing economy which dissuaded a portion of new households from even considering taking a pay TV subscription," the news release continued.

Cable operators used "heavy promotional bundles as well as service initiatives such as TV Everywhere" to cut back on subscriber losses. Still, the report noted, 460,000 video subscribers quit cable in the third quarter--an improvement, for the glass-half-full crowd, over the 512,000 who left during the same time period in 2011 and especially the 739,000 who dropped off in Q3 2010.

The primary concern for cable operators should be cord cutters who are "eschewing pay TV in favor of OTT--which could be called 'cord nevers,' rather than 'cord cutters,'" the news release continued.

Things shouldn't get any better in the next quarter when promotional deals expire and "video subscriber losses are expected to increase," creating the ninth straight year when subscriber numbers declined.

But there is a ray of hope--as MSOs often point out--because "U.S. cable operators are making gains in two other endeavors: high-speed data and voice," which led to an actual overall 0.4 percent gain of subscriber RGUs in the third quarter over the second.

For more:
- see the IHS iSuppli post

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