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Cable Technology Feature Article

September 24, 2010

Video Cord Cutting is Real, Verizon Argues

By Gary Kim, Contributing Editor

Though the data remains quite inconclusive, there are reasons different participants in the video ecosystem say different things about the danger of video cord cutting, where consumers terminate their multichannel video subscriptions and substitute other forms of entertainment video instead.

It's to the advantage of attackers to say the threat is imminent. It's to the advantage of cable and satellite execs to deny the extent of the threat, with telco executives a bit less inclined to downplay the issue, in part because the other competitors have more to lose. 

The cable business is going to go the way of the wireline telephone business, says Verizon (News - Alert) CEO Ivan Seidenberg.

Seidenberg says he doesn't believe demand for multichannel video entertainment is going away immediately. But it will, he noted.

“We take the over the top issue with video very seriously,” he said. “I think cable has some life left in its model…but that it is going to get disintermediated over the next several years.”

Verizon might lose some of its video subs as well, but the issue is a matter of business model impact. As telcos have been hit very hard by voice competition and abandonment, cablers have gained at telcos expense--something like that will happen to cable, the dominant video provider.

Decline of demand for multichannel TV might affect Verizon, but nothing like it will cable, which relies on video revenue in the same way that telcos have relied on voice revenue. 

It might take a few more quarters to see whether there is a new trend in multichannel video, but there is at least a possibility that a peak has been reached in the multichannel video entertainment business, and that henceforth the total number of subscribers will start falling, as landline voice subs have for nearly 10 years. 

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Beecher Tuttle