05.04.2010 11:28 AM
Report: 12 percent of pay TV subscribers ready to cut the coax

A surprisingly large number of consumers are poised to cut off their pay TV service and use their computers to access their favorite TV programs and videos, according to a new report from the Yankee Group.

According to the report, one in eight consumers will ditch the coax and go online for video over the next 12 months. Dubbed "coax cutters," these consumers will follow in the tradition of telephone cord cutters who dumped traditional phone service in favor of mobile phones.

Three factors are driving consumers to make the switch, including a new wave of Internet-connected TVs, climbing pay TV subscription prices and a variety of connected consumer devices, including game consoles, that can act like a set-top box.

"At the most basic level, the decision to cut off pay TV services is an economic one," said Vince Vittore, Yankee Group principal analyst and co-author of "Consumers Consider Axing the Coax."

"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," he said.

Among the report's other findings: • The Pay TV market is flat-lining. Subscribers in Western Europe will increase 3.9 percent from 2010 to 2013; the number of U.S. subscribers will grow 6.9 percent in the same period.
• Younger consumers, ages 18 to 34, are more likely to cut off pay TV services.
• Consumers will turn to other devices to skirt pay TV services; 56 percent of households have at least one HDTV, and 43 percent have at least one gaming console.

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