TV Business Still Isn't in a "Disruptive" State

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We are now in a pre-quantum phase of the television business, where a slow, steady, “drip, drip, drip” of changes occur - none of which, in any single quarter, represent a major change.

The predictable changes we now expect to see are small market share gains by telcos, every quarter, at the expense of cable TV providers, with satellite provider share roughly stable.

That was the story in the second quarter of 2013, according to IHS. AT&T U-verse and Verizon FiOS (with some small additions by independent telcos) added a net 398,000 video accounts during the second quarter, up from 304,000 net adds in the second quarter of 2012.

The U.S. video subscription business instead lost a net 352,000 subscribers in the second quarter, according to IHS.

In a market with nearly 95 million to 101 million subscribers, that really isn’t such a big deal. That’s a market shrinkage of about three-tenths of one percent.

So we might be past the peak of multichannel video subscription rates, if not yet revenue. But the present rate of decline is not alarming, though indicative of the long term trend. It might not matter so much which provider segments are growing, and which are shrinking. The most important single fact is that the overall market is very slowly shrinking.

Still, cable segment’s lost 588,000 net subscribers. Satellite providers lost a net 162,000 subscribers, up sharply from 62,000 for the second quarter of 2012.

More significantly, 2013 is set to mark the first year ever that there will be an annual decline in total U.S. multichannel video subscriptions, IHS projects. Subscribers are set to decline to 100.77 million, down from 100.89 million last year.

AT&T and Verizon are taking market share, while cable and satellite are losing customers.

AT&T’s U-verse attracted 233,000 new subscribers in the second quarter. Verizon’s FiOS gained 140,000 new subscribers.

Some might characterize those changes are indicating significant video cord cutting or major disinterest in the product on the part of younger consumers forming households. So far, the changes indicate we are past the peak of the product life cycle, but are not yet in a “disruptive” phase where the decline becomes significant.

 




Edited by Stefania Viscusi
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