Cord-Cutters Will Snowball To 10% Of U.S. Homes By 2015: SNL Kagan
Firm Forecasts Over-the-Top Video Substitution for 4.5 Million U.S. Households in 2011
By Todd Spangler -- Multichannel News, 7/20/2011 5:20:30 PM
While so-called cord-cutting has been relatively minimal so far, an estimated 4% of occupied U.S. households -- 4.5 million homes -- will have substituted Internet video options for cable, satellite or telco TV service by the end of 2011, according to a new forecast from research firm SNL Kagan.
"Though the thin slice of households relying [on over-the-top] substitution could be dismissed as evidence of a lack of momentum behind cord cutting, the 4.5 million households it represents are not inconsequential, particularly in light of the basic subscriber declines for the cable industry," the firm wrote in a report released Wednesday.
Multichannel substitution via over-the-top delivery will grow from 2.5 million households at the end of 2010 (2% of occupied U.S. homes) to 12.1 million by 2015 (10% of all households).
Penetration of traditional pay television services may have peaked in 2009, according to SNL Kagan.
At the end of 2010, an estimated 84.9% of the occupied U.S. households subscribed to a multichannel package (after eliminating the overlap of customers with multiple subscriptions), the research firm said. The decline from nearly 86% at the end of 2009 illustrates "the potential peak in multichannel penetration."
SNL Kagan projects continued absolute growth in pay-TV subscribers, but the pace is "not expected to keep up with occupied household formation, leading to a long-term decline in penetrations for multichannel services," it said in the report.
In 2010, the industry reversed the first-ever declines in the second and third quarters of 2010 to produce a small overall increase for the full year. According to SNL Kagan, the modest subscriber gain "was neither convincing enough to dispatch the threat of cord cutting nor dismiss the impact of over-the-top substitution."
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