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In-Stat: Fall in pay TV subscribers due to economy

Market research firm blames the weak economy for the slight drop, and not people jumping ship to online content.

The number of pay TV subscribers in the U.S. declined slightly during the second quarter, but it's the economy and high unemployment--not so-called cord-cutters--that are to blame, according to a new report from In-Stat.

The number of "cord-cutters," or people who go cold turkey on their cable TV in favor of online programming, is actually low and is having a minimal effect on the industry, according to In-Stat's data released yesterday. The report also found that satellite TV and so-called telco TV (such as Verizon's Fios and AT&T's U-verse) both continue to bring in more customers, so any decline has been relegated to cable.

The number of subscribers to pay TV--which includes cable, satellite, and telco TV--dropped by 167,000 to 101.2 million, or two-tenths of a percent compared with the previous quarter. It's the first decline in recent history, but, overall, In-Stat believes the drop is more of an anomaly than a sign of things to come.

In-Stat pegs the quarterly drop more on the down economy and high unemployment rate as people look to cut costs like their high cable bills. Also, the second quarter is traditionally a down time as college kids cancel their cable TV subscriptions at school and return home for the summer.

For all of 2010, the firm expects the total number of pay TV subscriber households to grow by 947,000, ending the year at 101.8 million. Still, that is only 1 percent higher than for 2009, the lowest ever annual increase for the industry.


In-Stat specifically tracks and analyzes the mobile Internet and digital entertainment markets, providing research reports as well as consulting and advisory services.

Though the weak economy is certainly hurting the cable TV industry, other factors not mentioned by In-Stat may also be playing a role.

A recent survey from Strategy Analytics discovered that around 47 percent of cable customers said they'd switch providers for a 10 percent discount on their service, while more than two-thirds would leave for a 20 percent discount. Overall, the survey found that cable TV subscribers are more dissatisfied with their services than are those using telco TV, which could be another reason why telco TV continues to grow despite the economy.

"Cable is really vulnerable right now," Strategy Analytics analyst Ben Piper said in a statement. "Cable has only been forced to really compete in the TV market in the past few years. It pretty much had a monopoly for 30 years. And a key problem they're facing is a low perceived value for the money subscribers are paying."