US Pay-TV faces monumental drop in paid subscription

US Pay-TV services faced the biggest drop in subscription ever recorded in the second quarter, as economic woes and competition from Netflix and other over-the-top TV services set in.

The biggest reason for drop is increasing consumer interest in streaming boxes like Apple TV and Roku LT/HD. Services like Netflix and Hulu Plus come pre-installed in them.

Pay-TV services lost 348,000 net subscribers in the second quarter in the U.S., IHS Screen Digest reported Friday. The results were worse than the 340,000 subscriber loss in Q2 2011.

Cable TV services shed about 600,000 video subscribers, the biggest decline among U.S. pay-TV segments. Cable has seen its video subscriber numbers fall each of the past 21 quarters, IHS says.

Satellite TV services lost 62,000 subscribers in Q2. The decrease was due mostly to DirecTV’s loss of 52,000 subscribers, its first-ever decline, IHS says.

U.S. telecom TV services added 312,000 net new subscribers, but it wasn’t enough to offset the declines in cable and satellite subscribers. And telecom TV subscriber additions are slowing.

“Poor economic conditions played a role in declining subscriber additions for pay-TV operators in the second quarter,” IHS analyst Erik Brannon said in a statement. “Another challenge was in the competitive threat posed by OTT services, such as Netflix. Consumers are spending an increasing amount of time using Netflix at the expense of traditional services like cable and satellite, which may lessen the incentive to retain a pay-TV subscription.”

IHS says the number of pay-TV video subscribers generally will remain flat to slightly negative through 2016 and maybe longer.

Cable firms like Comcast and Time Warner Cable increasingly have been pushing their high-speed Internet and telephony businesses to offset losses of video subscribers. And they’re trying to buck up their video businesses with TV Everywhere services to compete with OTT TV services from Netflix, Hulu and Amazon.com.

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Posted by Usman Khalid on Aug 13 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.