Pay TV Cord Cutting is Red Flag, Not Death Knell-Strategy Analytics

US Cable Loses 2 Million Subscribers in 2010, but Telco TV and DTH Satellite actually gained subscribers

Boston, Mass., April 28,2011-US Cable operators saw over two million video customers evaporate from their rolls in 2010, whereas Telco TV and Satellite actually gained customers over the same period—more than compensating for Cable's losses and netting a modest 273,000 new Pay TV subscribers overall. A new report by Strategy Analytics suggests that the US Cable industry may not be taking the news seriously enough.

“Throughout the past seven consecutive quarters of subscriber losses, the inclination of Cable has been to point the finger at various external factors,” said Ben Piper, Director of the Strategy Analytics Multiplay Market Dynamics service. “Our analysis shows that neither the economy nor the housing market is to blame for these subscriber defections. The problem,” says Piper, “is one of value perception.”

Survey research conducted by Strategy Analytics showed that Cable subscribers had the lowest perceived value of all Pay TV platforms. Moreover, over half of those who said they intended to “cut the cord,” or cancel their Pay TV subscription without signing up for another, indicated that low value for money was a motivator.

“Much ink has been spilled on the topic of cord cutting,” said Piper, “and even skeptics are now admitting that it can’t be ignored. It’s important to be circumspect, however. We see cord cutting as a more of a ‘check engine light’ than a death knell for Pay TV.”

The report,“Winning? Cable’s Charlie Sheen Problem,” examines the role of macroeconomic factors on subscriber losses, addresses cord cutting and churn issues, and provides imperatives for Service Providers to stem the customer declines.