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Paid Subscription TV Business Takes Hit in Q2

SNL Kagan announced that the U.S. multichannel market delivered its worst performance on record in the second quarter, losing 216,000 customers compared to a 378,000 gain in the same period last year.

According to the statement, SNL Kagan data shows that full subscriber counts for cable, Direct Broadcast Satellite (DBS) and telco video dropped to 100.1 million in the second quarter. Cable suffered its worst quarterly video loss to date, plunging by 711,000 subscribers, with six of the eight Multiple System Operators (MSO) reporting their worst quarterly video losses as well. DBS and telco managed to add 81,000 and 414,000 subscribers, respectively.

Cable MSO’s share of combined video subscribers dropped to 61%, versus 63.6% in second-quarter 2009. Telcos continue to take market share in the video business, growing from 4.3% in second-quarter 2009 to 6.0% in second-quarter 2010. Although the DBS industry expanded market share over the past year, the gains have been modest at less than 1%.

“Although it is tempting to point to over-the-top video as a potential culprit, we believe economic factors such as low housing formation and a high unemployment rate contributed to subscriber declines in the second quarter,” said SNL Kagan Analyst Mariam Rondeli. “We are also seeing churn resulting from the broadcast digital transition, which boosted video uptake early last year, as many have abandoned their paid subscriptions once initial promotional contracts expired.”

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