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Cable Technology Feature Article

June 09, 2014

Could Cable Industry Lose $7 Billion in Video Revenues?

By Gary Kim, Contributing Editor

If consumers act on their reported sentiments, Comcast, Time Warner Cable, Charter Communications, Cablevision Systems (News - Alert) and Cox Communications will lose a combined $6.9 billion in revenues within a year, according to consultancy cg42.

The prediction of lost revenue hinges on the notion that customer frustration leads to churn. Is that the case? Maybe not, the dg42 survey does reveal high levels of potential trouble: consumers appear massively unhappy.

But the survey also reveals that consumers do not feel they have reasonable alternatives, a sign they might not be able to act on their frustration, even if they want to do so.

According to the results of a survey of 3,038 existing and former customers, 73 percent of respondents believe “cable companies are predatory in their practices and take advantage of consumers’ lack of choice.” That suggests dissatisfaction.

Some 53 percent of respondents say they “would leave my current cable company if I had a choice.” But do not feel they have a choice?

Nearly 60 percent do not believe a meaningful alternative exists. About 58 percent say “I don’t feel I have a real choice in TV/Entertainment content providers – I feel stuck with the provider I currently have.”

Other findings also suggest those very same consumers might believe they have few better choices. Some 69 percent say “there is too little competition among TV and entertainment content providers.”

That is a subjective assessment—a “feeling”—but the point is that perception is reality. If consumers believe they do not have viable alternative choices, even a desire to change providers might not lead to predicted levels of churn.

The point is that even significant unhappiness might not lead to much churn, if consumers think they have no real alternatives.

And that is why the suggestion that the cable industry might lose $7 billion in 12 months is so unlikely.

When was the last time the U.S. cable industry lost $7 billion worth of revenue in a single year? It has never happened.

Will cable operators ever see negative revenue growth in the video segment? Perhaps they will.

Even so, some might argue losses will be stubborn and slow, at least until an inflection point is reached, where content owners are willing to sell virtually all content now available to cable TV subscribers to providers of over the top services.

Losing $7 billion in one year would be a loss of about nine percent to 12 percent of cable industry video revenue, something that never has happened, and is extremely unlikely, in the meantime. 

Edited by Maurice Nagle

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