We’re not saying that the Yankee Group is the most authoritative source in the world when it comes to cable TV companies ‘ partly because it has spent its life commenting on telcos, but we are saying that it’s barking up the right tree in its report, out this week, on Coax-cutters.
It is predicting that one in 8 US consumers will cut off their pay TV services and use PCs, gaming consoles and other connected devices to access video programming instead, all during the next 12 months.
If that figure was true, and we think it is very previous even if we agree with the sentiments, then something like 9 million US pay TV connections could be lost during the next year. We’re fairly sure it will be far lower than that.
In its new report dubbed “Consumers Consider Axing the Coax,” Yankee says the number of coax-cutters will grow due to three main factors: a new wave of connected TVs, ever-escalating pay TV prices and the advent of connected consumer devices that can act like set-top boxes, including the Sony Playstation 3, Nintendo Wii and Microsoft Xbox 360 gaming consoles.
All of that is true, but if the main new OTT (over the top) services are not launched for another few weeks and not available immediately, then that leaves very little time for early adopters to sample the goods and put the word out among the general population.
“At the most basic level, the decision to cut off pay TV services is an economic one,” says Vince Vittore, principal analyst and co-author of the report. “As programmers continue to demand ever higher fees, which inevitably get passed on to consumers, we believe more consumers will be forced to consider coax-cutting.”
This has the feel of someone who has personal experience, and Vittore may be pleased to know that Comcast was voted the worst company in America last week, purely for its habit of constantly raising prices ahead of inflation.
Other findings from Yankee suggest that the Pay TV market is flat-lining suggesting that subscribers in Western Europe will increase just 3.9% percent from 2010 to 2013 while US subscribers will grow only slightly faster at 6.9%. This we cannot accept. Pay TV in parts of Europe are in their infancy and will keep the overall European figures high, while the uptake caused in the US over analog switchoff, will see the US slow radically, by comparison, over the next two years. Europe itself has a variety of switchoff dates between now and 2012, and should experience some pay TV substitution in the same way the US did last year. So no way the US, which is semi-saturated in Pay TV can lose 9 million homes to coax cutting and still outgrow Europe, but the overall trend direction is spot on.