09.01.2010 02:30 PM
Pay TV audience shrinks in second quarter

Uncertainty over the U.S. economy, slumping home sales and their impact on how people allocate discretionary spending appear to being having an effect on the number of people who choose to pay for TV in the United States.

According to SNL Kagan, the number of cable, satellite and telco TV subscribers declined by 216,000 in the second quarter of 2010 — a first for the pay TV industry. That figure compares to an increase of more than 375,000 in Q2 2009.

While on the surface the numbers appear discouraging for multichannel video program providers, cable TV was the big loser. More than 700,000 people dropped cable TV service, while about a combined 500,000 more people subscribed to satellite and telco TV services.

An SNL Kagan spokesperson quoted in media reports about the decline said the drop was more likely due to economic considerations than a reflection of a growing adoption of over-the-top (Internet) TV viewing.

To what degree broadcasters can tap into the decline in cable TV subscription to recoup over-the-air audience members is unclear, particularly in light of the fact that an entire generation of television viewers seems unaware of the fact that TV is broadcast. However, with mobile DTV slowly rolling out in markets around the country, the expected holiday shopping season availability of new mobile DTV receivers from various vendors and continued uncertainty in the economy, a growing number of people are likely to become reacquainted with or introduced to the concept of free over-the-air television and possibly be motivated enough to give OTA DTV a serious look.

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