Blame IPTV competition for cable's woes… but watch out for Google Fiber

by | Aug. 3, 2012

Written by Jim O'Neill, Parks Associates Research Analyst

During an earnings call this week, Time Warner CEO Jeff Bewkes maintained that cord cutting is a myth, challenging someone to show him the numbers.

To a point, that’s not very hard to do if you look at the cable TV industry only. Since 2008, cable has lost a whopping 4.5 million subscribers in the U.S. As the second quarter numbers roll in, MSOs are likely to lose another 1.38 million by the end of the year, and that figure, frankly, is a conservative estimate.

On the flip side of the coin, IPTV and satellite in the U.S. have seen their numbers grow. AT&T and Verizon have added some 5.5 million new subscribers between 2008 and 2011, and Dish and DirecTV have added another 2.55 million. That combination nets roughly 3.55 million new pay-TV subscribers.

At Parks Associates, we believe cable numbers are going to continue to erode through 2017, falling at least another 3 million subscribers. The high flying days of satellite could be coming to a close as well. Our forecast? Dish and DirecTV could see subscriber losses of 1.3 million or more.

If you stopped there, it would be easy to say the 407,000 subscribers who’ve left Comcast (176,000), Time Warner Cable (169,000), DirecTV (52,000) and Dish (10,000) so far this quarter are the bleeding edge of that cord cutting. However, that 407,000 falls to just 25,000 when you add in AT&T and Verizon, which have added 382,000 subs this quarter.

And we expect that trend to continue. Between 2011 and 2017, the two telcos could collect another 10 million subscribers.

In the current market, it’s really competition that’s driving the shift in customers. So, rather than cord cutting  the reality appears to simply be “cord switching.”

A wild card is on the horizon, though. Google Fiber bears watching. Google is using a combination of social media, gamification and community rewards as it build “fiberhoods” in Kansas City. If you get enough of your neighbors to pre-register for Google’s fiber products (the progress of which you can track on a website), Google will provide your local school, community or medical center with free Internet access. Wow.

Next: Motorola not making Google Fiber STB
Previous: BSkyB Now Virtual MSO


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