Internet TV Appears Poised to Devour Cable

Google-TV US cable TV losing subscribers as online grows according to a study released last week. The findings point to a growing pool of potential customers for online services such as Hulu and Netflix and newcomers like Apple TV and Google TV, which offer lower prices and more flexibility, analysts say.

According to research firm SNL Kagan, US cable operators lost 741,000 basic video customers in the third quarter of the year, the biggest decline since it started tracking the segment in 1980.
Comcast, the largest US cable operator, lost 275,000 video subscribers during the third quarter while Time Warner Cable, the second-largest, shed 155,000 video customers in the July-September period.


The pay television sector — which includes satellite television and TV services offered by telecom firms in addition to cable — lost 119,000 customers in the quarter after gaining 346,000 a year ago, SNL Kagan said.

Combined with a loss of 216,000 customers in the second quarter, the first ever decline in its history, the pay television segment has fallen 2.3 percent in the last six months to around 100 million subscriptions.
 
Netflix may prove to be the ultimate big winner. It has positioned itself, not as being a substitute for television viewing but as a complementary service. Netflix claims over 16 million members in the United States and Canada and last week unveiled a 7.99-dollar monthly plan that allows unlimited streaming of movies and television over the Web.

Hulu, which is owned by The Walt Disney Co., News Corp. and NBC Universal, recently introduced "Hulu Plus," which offers online viewing of recent television episodes, also for 7.99 a month.

While penny-pinching in hard times is behind the decision of many Americans to abandon pay television, industry analysts said there are signs that some are replacing cable with the newly available online options.

"It is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains," said Ian Olgeirson, senior analyst at SNL Kagan.
Jeff Kagan, a telecom industry analyst who shares the same name but is not affiliated with SNL Kagan, said a number of factors were behind the drop in cable subscribers, including the inability to buy channels a la carte.

Kagan said US consumers have lived with costly monthly cable bills for years because they had no choice but "now things are changing."

"Suddenly there is competition in many markets from satellite television companies and the IPTV services from phone companies," he said. "Suddenly the economy is rough and people increasingly want to save money.

"Suddenly there are new services that are popping up like Google TV and Apple TV and more, taking us away from traditional television," he said.

Jason McManus via (c) 2010 AFP and physorg.com

 

 

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