As alternatives to traditional cable TV services continue to be introduced, the discourse grows regarding whether or not consumers are ready to “cut the cord.” Recent data from ESPN and research firm SNL Kagan suggests that any cable subscriber losses are being offset by gains elsewhere. However, as a percentage, fewer households are subscribing to cable than in the previous year. And financial services firm Stifel Nicolaus recently reported that pay TV might not be making a comeback over the longer term. The research report indicates year-over-year subscriber growth was at a mere 0.3 percent during 2010 — “the lowest year-over-year growth on record.”
According to Stifel Nicolaus analyst Christopher King: “Cable operators have been quick to point to housing and the anniversary of the nationwide digital transition in 2009 as reasons for recent subscriber declines; however, our analysis suggests that growth in the pay TV market has underperformed household formation in recent quarters and the impact of the 2009 digital transition should no longer be an issue.”
The pay TV market is over-saturated (at more than 84 percent of households), and while many continue to blame the state of the economy and the saturation on the declining numbers, it is interesting to note that Netflix added 6.4 million subscribers during 2010. As the cost of pay TV subscriptions continue to rise, consumers are beginning to “further re-evaluate the value they place on traditional pay TV services which bodes well for the likes of Netflix, Amazon and Apple TV among others,” King wrote in the report.
Editor’s Note: For those interested, the GigaOM post “Cord Cutting Threat Ain’t Over Yet” features some very interesting charts including Pay TV Subscriber Growth 3Q09-4Q10, Pay TV Penetration 4Q06-4Q10, and Netflix Subscriber Growth 2010 (as compared to Pay TV).