Executives in the telephone industry long ago became accustomed, if not resigned, to the idea that they would steadily lose their legacy voice customers. Precisely when the losses stabilize few publicly would predict.

 

Cable TV executives might now be fully and quietly resigned to the idea that they now will experience market share losses in their legacy video entertainment business, as competitive market dynamics now bear fully on that segment.

 

Researchers at In-Stat (News - Alert) now project U.S. cable TV operators will lose about a million video customers a year, and that cable TV might even lose its status as the dominant provider of video entertainment services in a decade or so.

 

One can make that prediction based on the existence of 99 million subscribers to multi-channel video customers overall, with 66 million currently served by cable TV providers, 33 million by satellite and three million by telcos, as well as a growing rate of attrition as competitive offerings from telcos, in particular, gain momentum.

 

A linear loss of one million customers a year leads to a one-percent swing in annual market share. That would imply a cable market share of about 56 percent in ten years. But the rate of losses will not likely be linear.

 

The biggest single reason is that, up to this point, AT&T (News - Alert) and Verizon, the two largest telco providers, have been building their networks and have not been able to market actively. The rate of share gains by those two companies alone will therefore become non-linear for much of the next 10 years.

 

Verizon alone has gained a million new video customers over the last year, as had DirecTV (News - Alert). Granted, there are market share shifts occurring within the satellite realm, not just between cable and telco, with satellite a de facto as well as de jure telco partner.

 

If cable losses increased by 500,000 a year above the current rate, the industry collectively might wind up with a bit over 52 percent share in 2019.

But we likely are headed for a period when share gains by telcos ramp up dramatically. In that regard, AT&T noted in its most-recent quarter that roughly two thirds of its video subscriber gains came from defecting cable customers, and that its rate of growth has doubled, year over year.

 

Still, the U.S. cable TV business will remain the dominant paid-TV service for the next decade, predicts Mike Paxton, In-Stat analyst.