U.S. HISPANIC

SNL Kagan report: OTT substitution forecast to erode multichannel subs

Maribel Ramos-Weiner| 26 de julio de 2011

Internet delivery of television and movies has rocketed into the mainstream, but so-called over-the-top (OTT) substitution has remained a relatively small, though not inconsequential slice of the user base. The segment, often termed cord cutters, impacted the subscriber counts for multichannel service providers in 2010, and is expected to exert competitive pressure going forward.SNL Kagan estimates nearly 4% of the occupied U.S. households will employ Internet video in lieu of subscribing to a multichannel video package at the end of 2011. Though the thin slice of households relying OTT substitution could be dismissed as evidence of a lack of momentum behind cord cutting, the 4.5 million households it represents are not inconsequential, particularly in light of the basic subscriber declines for the cable industry.At the end of 2010, the Kagan report estimated 84.9% of the occupied U.S. households subscribed to a multichannel package after eliminating the overlap of customers with multiple subscriptions. The year-over-year dip from nearly 86% at the end of 2009 illustrates the potential peak in multichannel penetration.OTT substitution is the primary agent in the expected declines in traditional cable, DBS and telco video penetration. SNL Kagan considers multichannel substitution via OTT delivery will grow from 2.5 million households at the end of 2010 to 12.1 million homes by 2015. The OTT substitution estimates account for nearly 10% of the occupied homes in the U.S. in the five-year forecast.

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