Cord-cutting on upward trajectory but minimal effect on pay-TV

Joseph O'Halloran ©RapidTVNews | 03-04-2012

Even though they have reported less subs additions than ever and cord-cutting continues to rise, broadcast and cable networks should not unduly fear a mass exodus from their services, new research from the Convergence Consulting Group has found.
In the report, The Battle for the North American (US/Canada) Couch Potato: Bundling, TV, Internet, Telephone, Wireless, April 2012, the analyst calculates that broadcast and cable networks in the US added 112,000 TV subscribers in 2011, a disappointing performance when compared with the 272,000 in 2010. However, the projections are that this represents a bottoming out, and Convergence Consulting forecasts 185,000 TV sub additions for 2012. By way of reference, the analyst notes that for the 2000-2009 period, annual TV sub additions averaged 2 million.

Digging deeper into the falling subs trend, the analyst suggested that cord-cutting certainly played a part in depressing the figures and applying its TV Cord Cutting Model that takes into account economic conditions, annual subscriber additions, digital transition, it estimates 2.65 million (2.6%) US TV subscribers cut their TV subscriptions in the 2008-11 period to rely solely on over the top (OTT) services such as Hulu and Netflix. It adds that 1.05 million (1%) cut the cord in 2011 alone and forecasts that cord-cutters will reach 3.58 million (3.6%) by the end of 2012.
Yet the analyst also pointed to the fact that the broadcasters were not giving upon online to the OTT players. Not only did it estimate that on average 19% of the weekly viewing audience watched on average between one to two episodes at a broadcaster or cable network online destination or one of their distribution partner’s websites, it also suggested that the firms were reaping increasing online revenues. Convergence Consulting calculates that broadcast and cable network online TV advertising revenues represented 2.8% ($1.9 billion) of 2011 US broadcast and cable network TV advertising revenue, and forecast 3% for 2012.