While many in the cable TV industry are starting to believe that cord-cutting is not the threat once thought, US research firm Parks Associates warns that another threat is emerging which is just as dangerous: ‘cord-switching’.
Jim O’Neill, research analyst at Parks, observes that cablecos in the US continue to lose video customers, with 4.5mn evaporating since 2008 and another 1.38mn likely to disappear by the end of the year.
However, IPTV and satellite operators continue to see their numbers grow: AT&T and Verizon added some 5.5mn new subscribers between 2008 and 2011, while Dish and DirecTV added another 2.55mn – together equal to roughly 3.55mn new pay-TV subscribers across all platforms.
Parks warns that the satellite operators’ glory days may well be behind them, predicting that Dish and DirecTV could see subscriber losses of 1.3mn or more through 2017, while cablecos lose at least 3mn.
Meanwhile, IPTV operators AT&T and Verizon are expected to collect another 10mn TV customers over the next five years, with O’Neill ascribing this shift to market competition – thus implying that the two telcos have more compelling offers.
The analyst adds that there is a wild card on the horizon: Google Fiber. The search giant launched its fibre-to-the-home (FTTH) network in Kansas City last week, along with its own IPTV service, and is using a combination of social media, gamification and community rewards as it build “fiberhoods”.
While this is just a test project at present, many believe that Google is preparing to roll out similar networks in other parts of the US, using what it has learned in Kansas City, and if done on sufficient scale could become yet another threat to established cable TV operations.