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TDG Opinion: Pay-TV Households Have Peaked

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Pay-TV Households Have Peaked and Are Set to Decline thru 2017

Michael Greeson, Founding Partner ~~~~~

January 10, 2013 Now here's a forecast that might wake you up...at least in time for the fireworks. According to new forecasts from TDG, the number of US households that subscribe to traditional cable-like pay-TV peaked in the last two years and is projected to decline from nearly 101 million in 2012 to less than 95 million in 2017. TDG strongly believes that the number of pay-TV subscribers will undergo a noticeable decline in the next few years. Of course, any decent forecast has a long list of stipulations, a few of which are listed below. Let's be clear:

* This forecast assumes that pay-TV operators forgo à la carte during the stated period, which is a relatively safe assumption. Should MVPDs embrace a la carte, the forecast could change dramatically. I happen to believe that operators will not wake up to the fact that the market demands à la carte - at least not in time to avoid the decline illustrated above.

* American operators should have learned from Canadians five years ago (as we noted at that time). Though hesitant to offer anything close to a true à la carte package, many Canadian operators introduced "modified" à la carte offerings. Why? Not out of the goodness of their heart, but because "the local markets demanded it," and because it was a "compromise" needed to retain subscribers. But let's not get carried away: the loss of six million subs in the next five years is hardly the end of the world for traditional pay-TV. My question is whether it constitutes a paradigm shift - a tipping point in the evolution of home television and video viewing in general - or just a short-term blip on the radar. I tend to think it's a tipping point, a structural shift will long-term tectonic implications.

ENDS


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