Confidence is no less an issue in the cable TV industry than it is anyplace else in the economy. Some programmers and distributors (perhaps all) are concerned that what happened to the music and newspaper industries could happen to the multi-channel video entertainment industry.

 

Namely, widespread access to online content could disrupt the “packaged” business. In fact, some seem to believe a whole generation already essentially is “lost” to packaged services.

 

Liberty Global CEO Michael Fries says he is looking beyond the “20-somethings” who seem to have looser bonds with cable, satellite and telco video offerings. “I have kids who are 10 and seven and they have a very different relationship with the television than teenage kids,” he says. “The point I’m making is that we have a generation below this lost generation that we can still capture and retain, if this industry does it right.”

 

What is noteworthy is the belief that disintermediation is a fact, not a possibility, at least for one generational cohort. Content companies seem to be terrified about the prospect, says Craig Moffett, Bernstein Research analyst. That’s a rational fear. What seems less rational is the belief that the change already has happened, or will happen in a massive way.

 

“I call it the phenomenon that isn’t,” says Bruce Leichtman, Leichtman Research Group president. Some appear to think future behaviors already are “baked in,” and simply are not yet visible because younger users haven’t established their own households yet. That is a reasonable hypothesis which cannot yet be proven or disproven. But there doesn’t seem to be evidence of the trend, yet.

 

One cannot point to existing behaviors that mimic what is happening with incumbent landline voice, for example. Incumbents are losing share to cable and other competitors, to be sure. And there are perhaps 18 percent to 20 percent of U.S. households that report they are “wireless only.”

 

No comparable trend can be found in the video entertainment business. People are watching online video, no doubt. But there still is not evidence that an appreciable number of users are abandoning packaged video or television in favor of online viewing.

 

One can point to providers who are losing share, but market share shifts are not the same thing as product abandonment or substitution. Basic video subscriptions have been on the decline for the past few years and advanced services growth has slowed at Time Warner (News - Alert) Cable, for example. But share is being gained by AT&T and Verizon Communications. And market saturation is an issue as well.

 

“We’re seeing different impacts on different business segments and in different parts of the country,” says Time Warner Cable CEO Glenn Britt.

 

The company saw a slight change in disconnects since October 2008, he says. Broadband and phone sales still are growing, but at a slower rate than in past years. Of course, the broadband market is saturating, and cable companies probably have exhausted the easy pool of customers unhappy enough with their current provider – or highly attracted to the “same service, lower price” positioning – to make an immediate change.

 

Better competitive response by telcos likely plays a role as well.

 

But confidence seems to be an issue, in cable as elsewhere.