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Are Americans really starting to cut the cable cord?

One report shows cable TV is hit the hardest in a decline in pay-TV subscribers

Published: March 20, 2014 11:45 AM

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The availability of lower-cost streaming services may finally be starting to hit cable TV where it really hurts the most: pay TV subscriptions. That's one possible conclusion from the most recent estimates from the market research firm SNL Kagan, which says that in 2013, the pay-TV segment posted its first decline in annual subscriptions.

While the firm says that collectively all pay TV services—cable, satellite, and telco (traditional telephone companies that offer television service)—lost about a quarter of a million subscribers, cable operators took the hardest hit: They lost about 2 million customers, while satellite and telco TV services posted modest gains.

There are always seasonal fluctuations in pay TV service subscribers, but this is the first time that the number dropped over a full year. While there was an uptick in pay TV subscriptions across all types of providers at the end of the year, the last-quarter gain of about 40,000 subscribers—plus the yearly increases posted by satellite and telco companies—weren't enough to compensate for the number of cable subscribers who cut the cord.

TV service

Total subscribers (2013)

Loss/Gain in 2013

Cable TV (basic)

54.4 million

Lost 2 million subscribers

Satellite TV (DirecTV, DISH)

34.3 million

Gained 170,000 subscribers

Telco (AT&T U-verse, Verizon FiOS TV)

10.7 million

Gained 286,000 subscribers

Source: SNL Kagan

The interesting question, of course, is whether this is a one-year aberration, or real evidence of the much-talked-about cord-cutting trend, where more people are giving up traditional pay TV services in favor of getting their paid video entertainment exclusively from online streaming services, such as Amazon Prime, Hulu Plus, and Netflix. (More people also seem to be using antennas to get free over-the-air TV.)

Of course, some of the cable subscriber losses can be attributed to people switching to either satellite or telco TV services, which gained more than 450,000 new subscribers last year when you include some IPTV services from company's such as CenturyLink (PrismTV) and Consolidated Communications Holdings.

But there is also evidence that cable TV is fighting back with better equipment, and TV Everywhere services that let you view content on tablets and smart phones in and away from your house. There also seems to be a growing trend that more networks are asking for pay TV authentication before allowing you to view their shows online.

If you've been considering whether or not cutting the cord makes sense for you and you family, check back with us next week when we'll be posting a series of articles about how you can save money on your triple-play services—even if you decide not to cut the cord.

—James K. Willcox

   

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