FYI -- from the monthly Bridge newsletter (http://www.mediabiz.com/thebridge/#top
), which focuses on the subscription TV industry:
From Zero Sum to Underwater
About That Shrinking Pie
Just three months ago we wrote about the zero sum game. Some pay TV providers saw their numbers rise; others suffered losses. Overall, the pie remained pretty much the same.
The second quarter of 2010 marked the first time in pay TV history that subscriber numbers actually shrank. Looking at data reported by the top 12 public MVPDs, total subscribers dipped by nearly 55,000. An analysis by SNL Kagan was far more devastating as the firm estimated a total 216,000 pay TV subs dropping from subscription rolls across the second quarter.
What's causing the drain?
Ah, take your pick ...
• A still lousy economy with unemployment in double digit territory and, according to the National Assn. of Realtors, 4.6% of all home loans in foreclosure at the end of the second quarter? (And, yeah, we know: Nielsen projected an increase of 1M new TV households across this next TV year. Could be ... if you count antennas attached to car roofs.)
• The steady march of over-the-top-TV as Netflix, Apple, Amazon, YouTube et al march into the TV-via-internet business?
• The ever-rising costs of pay TV subscriptions which added to the two above could drive households into any number of savings solutions?
They're all possible. And all likely. And we'll all be holding our breaths to see how Q3 fares in the numbers game. But in the meantime, a look at exactly what did go on in the second quarter of 2010.
FWIW, a quick glance at these numbers indicates that the bulk of subscription losses were for analog rather than digital services. While a customer loss is a customer loss, I'm sure that if given a choice that these companies would much rather lose an analog customer than a digital. For one, the digital customer is surely adding more to the bottom line (maybe double?) and these companies have to be looking forward to winding down their analog networks, as they are particularly inefficient in terms of bandwidth usage. Getting from A to D is still going to be a hairy challenge, and I would say that this is probably the best hope for migration back to free TV, as this part of the subscriber base is probably most cost-inflexible and much less likely to find Internet-based alternatives friendly/acceptable.