Even as Cable-TV Subs Rebound Slightly, More Consumers Say They Plan to Disconnect

A New Survey Says More People Considering Cutting Back

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The cable-TV industry breathed a collective sigh of relief yesterday when an SNL Kagan report on pay-TV-subscriber numbers showed a slight uptick in pay-TV subscribers after an unprecedented two straight quarters of decline.

The pay-TV-subscriber roles actually increased 0.2% or 211,000 subscribers in 2010, which is much worse than the 1% to 2% increases the industry has enjoyed over the past decade but better than a decline. The total number of pay-TV households increased to 100.1 million, SNL Kagan said.

It would be easy to attribute slow and negative growth to the economy and the high price of pay-TV offerings that is no doubt the biggest factor. But the bigger concern is that consumers will decide they can entertain themselves just fine with free or a la carte video on the web, from providers like Hulu, Netflix and iTunes -- maybe even Facebook.

And that concern has not disappeared with yesterday's numbers: Consumers are increasingly saying they plan to do just that, according to a new survey from Knowledge Networks.

U.S Video Marketshare Trends
Quarter Combined Video Subs Combined Net Adds
Q2 '08 97,682,000 239,000
Q3 '08 98,007,000 324,000
Q4 '08 98,070,000 63,000
Q1 '09 98,901,000 831,000
Q2 '09 99,280,000 378,000
Q3 '09 99,626,000 346,000
Q4 '09 99,877,000 251,000
Q1 '10 100,358,000 481,000
Q2 '10 100,142,000 -216,000
Q3 '10 100,023,000 -119,000
Q4 '10 100,100,000 65,000

There's frequently a big gap between what people say to a survey-taker and what they do, but when Knowledge Networks asked more than 1,500 people between the ages of 13 and 54 if they planned to cut back or eliminate cable, 17% of the respondents who had downloaded or streamed TV on the web said they had already cut back or eliminated pay-TV service in 2010. That's from 9% in 2009. In all, 4% of those surveyed said they plan to change their subscriptions this year.

That sounds small, but if even a fraction of them follow through that could easily mean a decline in pay-TV households for 2011.

Then again, what the pay-TV industry needs to fear more than subscribers cutting back or even disconnecting service are the so-called cable-nevers, a generation of young people who never get a cable or satellite-TV subscription. Does this generation really exist? No one knows for sure. The cable industry has long seen the formation of new households as the time to acquire new customers, and that usually happens around the age of 25 -- but it has been creeping older. By the time cable operators figure out the "nevers" are for real, it could be too late.

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