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Streaming Video Putting Paid Cable in a Bind

23 Jan, 2013 By: Doug McPherson

FRISCO, Texas – Streaming video technology is getting better and that’s hurting cable, says research group TDG.

Paid-TV subscriptions topped out at about 101 million in 2011, remained virtually unchanged in 2012, and will sink to less than 95 million by 2017, TDG contends. Today, 87 percent of U.S. broadband households currently subscribe to a pay-TV service – a decline of almost five percentage points since 2010.

Michael Greeson, director of research at TDG, says Netflix and Hulu Plus are part of the reason, but that those services are still supplementary for most consumers. He says what will really bruise pay TV is when consumers adopt new OTT (over-the-top) technology – from Apple and Intel – as their primary entertainment services. “That’s what is going to change things, and they’ll be live in one year,” he predicts.
TDG says a growing number of broadband subscribers are now doing without pay-TV services altogether, having either cut the cord or never signing up at all. In all, TDG considers 13 percent of U.S. broadband households – 10 million – to be “pay-TV refugees,” of which 2.6 million have never subscribed to a pay-TV service. By its estimates, 7.4 million once subscribed to pay TV but have since cancelled the service.

Most cord-cutters (71 percent) cite the high cost of paid TV as their primary reason for leaving, while 28 percent cite free online video-on-demand services such as Hulu. In addition, 25 percent cite paid VOD services like Hulu Plus and Netflix as reason enough for cutting their cords.

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