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Report: Cable Households to Decline

13 Oct, 2009 By: Erik Gruenwedel

Cable TV household penetration is projected to drop 4% over the next 10 years as both telecom and Internet-based video services increase market share, content offerings and monthly subscribers, according to a new report.

SNL Kagan said online video services would account for 7.1 million homes by 2013, reaching more than 14 million homes by 2019. Conversely, multichannel penetration of TV households will decline from 84.4% penetration at the end of 2008 to 83.3% penetration by 2019. Cable TV will experience the greatest losses, dropping from 63.2 million subscribers this year to 60.7 million subs in 2019.

Competition for an increasingly fractured home entertainment market last month prompted Comcast Corp. to enter into negotiations with General Electric regarding majority acquisition of NBC Universal, including Universal Studios Home Entertainment. The No. 1 cable operator in the United States said it would use first-run access to movies and TV content as a means of both growing and sustaining its base of 25 million subscribers.

Indeed, the number of total U.S. households with TVs is expected to grow just 1.3% over the next 10 years, with multichannel subscribers increasing just 1%.

Kagan said direct-broadcast satellite (DBS) providers growth would remain strong over the next few years, increasing from 32.2 million subscribers in 2009 to 33.6 million in 2013, before falling to 33 million in 2019. The telecom industry, including services such as Verizon’s FiOS fiber-optic TV service, is expected to grow its subscriber base over the next 10 years to 16.7 million from 5.7 million.

“Telecoms are well-positioned to grab the majority of new customers,” said Kagan analyst Mari Rondeli. “However, Telco’s limited footprint — only 24% of total homes — means cable and DBS will easily maintain the greater portion of the pie.

Rondeli said she expects Telco video services will be available to 77.8 million households in 10 years, but that still leaves about 54 million without a facilities-based video product.

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