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Wednesday, April 04, 2012

The Slow Death Of Cable: 3.58M Projected To Drop Cable/Satellite In 2012

At PaidContent, more ominous sounds of the paid TV market creaking before she hits the sea floor (once more, all emboldening is mine):
According to the Convergence Consulting report, “The Battle for the North American Couch Potato: Bundling, TV, Internet,Telephone, Wireless,” 2.65 million American multichannel subscribers cut their cords between 2008-2011 and switched to over-the-top (OTT) services like Netflix (NSDQ: NFLX) to get their video programming. The report says that only 112,000 cable, satellite and telco TV service subscriptions were added in the U.S. last year — less than a third of the 380,000 added subscriptions that Leichtman Research Group reported last month while auditing only the top multi-channel programming services.

Regardless of whose number you use, the news isn’t great for the cable and satellite business, which from 2000-2009 added an average of around 2 million subscribers a year. Convergence Consulting believes migration of consumers to over-the-top services to is blame for this sudden drop-off and says the trend will only accelerate further in 2012. In fact, the firm projects the number of folks ditching their cable or satellite service in 2012 for OTT services to reach nearly 3.58 million.

There is an argument that Fox and the other RSNs will simply eat the losses if all their contracts go sour, but I find this difficult to believe. It is the same argument that said the Titanic couldn't go down because it had so many watertight compartments. Such a view fails to consider massive and systemic breaches. That's what this projects.

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