US cable operators reported their best third-quarter performance in terms of video subscribers in at least two years. However, this says more about the darkness of the last few quarters than anything else.
The sector still lost nearly half a million subscribers during the period, as competition from IPTV services like Verizon FiOS and AT&T U-verse continued to diminish cable operators opportunity to add new households to their customer rolls.
Overall, according to the latest IHS Screen Digest Television Intelligence Report, net subscriber losses for the full year of 2012 are expected to exceed those in 2011.
US cable operators lost a net total of 460,000 video subscribers in the third quarter of 2012. This compares to a reduction of 512,000 in the third quarter of 2011 and a 739,000 plunge during the same period in 2010. It also represents an improvement compared to the 599,000 drop in net subscriber additions in the second quarter of 2012, the firm said.
"US cable operators in the third quarter trimmed their video subscriber losses by using heavy promotional bundles as well as service initiatives such as TV Everywhere, which offers features like live linear streaming of cable networks in-home and video-on-demand service in and out of home, through the open Internet," said Erik Brannon, analyst for television research at IHS. "However, subscriber numbers still decreased in the third quarter because the attractiveness of over-the-top (OTT) services delivered over the open Internet, and an ailing economy also dissuaded a portion of new households from even considering taking a pay-TV subscription. These new households that are eschewing pay-TV in favor of OTT — which could be called 'cord nevers,' rather than 'cord cutters' — represent a lost segment of the market for pay-TV operators."
As the cable operators' promotions from the fourth quarter of 2011 expire, their video subscriber losses are expected to increase. For the full year 2012, US cable subscribers are anticipated to shrink to 56.6 million, down 3% from 58.4 million in 2011. This compares to a 2.8% contraction in 2011.
The year 2012 will represent the ninth consecutive year of decline in US cable video subscribers, going back to 2004. While the video portion of the cable business continues to struggle, the U.S. cable operators are making gains in two other endeavours: high-speed data and voice.
Data subscribers in the third quarter rose by 983,000, while voice increased by 276,000. These gains mean that total US cable subscriber revenue generating units (RGUs) — including video, data and voice — ticked up 0.4% in the third quarter compared to the second, according to HIS Screen Digest.