Americans may be falling out of love with pay-TV for good.
U.S. multichannel TV providers, including cable TV operators, posted their first full-year decline in subscriptions last year, according to research firm SNL Kagan.
About 100 million subscribers still pay $30 or more per month to receive pay-TV but the total fell by about 251,000 in 2013, continuing a downward trend that has worried cable executives for years. The industry added 40,000 video subscribers in the fourth quarter, slightly weaker than the year-earlier period and not enough to offset the losses in earlier months.
Rising prices, pay-TV operators’ poor customer service, enhanced offerings from video streamers and other online distractions are pushing more TV watchers to ditch their monthly cable bills. Until 2013, the industry has been able to maintain its year-over-year growth despite the defections, as legions of customers still enjoy its easy-navigation tools and live programming.
But the full-year decline is a worrisome development that could signal an irrevocable downturn for the video segment of the industry that is scrambling to upgrade options to retain customers.
“While seasonally driven quarterly declines have become routine for industry watchers, the annual dip illustrates longer-term downward pressure even as economic conditions gradually improve,” SNL’s report said.
In an interview with USA TODAY’s editorial board Tuesday, Comcast CEO Brian Roberts said the nation’s largest cable provider lost customers 26 quarters in a row until it eked out a gain in the fourth quarter last year.
To stem the loss in the video business, the Philadelphia-based company is offering more on-demand and other video options stored in the cloud and looking to introduce new subscription tiers, he said. “Our (profit) margin has gone back on video,” he said, citing rising programming costs as a contributing factor.
The decline in video subscription is attributable partly to consumers who never bothered to order new service as they moved into new homes. “Housing formation was modest but still outpaced new subscriptions,” it said.
The cable operators suffered the highest rate of decline, losing nearly 2 million subscriptions to finish last year with fewer than 54.4 million.
The two main satellite TV providers, Dish Network and DirecTV, gained 170,000 subscribers, “forestalling an annual decline for perhaps another year,” the report said. DirecTV contributed nearly all of their annual gain. There were 34.3 million satellite subscribers as of the year-end.
The “telco” segment, which includes the companies that offer fiber-optic based TV services, fared better than competitors. Verizon FiOS and AT&T’s U-verse, the two dominant companies in the segment, gained 286,000 customers, reaching 10.7 million. Customers of CenturyLink’s PrismTV totaled 175,000 after adding 9,000 new subscriptions. Consolidated Communications Holdings’ IPTV added 1,000 to end the year at 110,000.
Courtesy of USA Today