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There’s now even more evidence that subscribers are cutting the cord and opting out of paying for cable: By adding up subscriber losses from four of the top five cable companies, we found that more than half a million users have ditched their cable companies.
The carnage began last week when Comcast announced it had lost 275,000 basic cable subscribers, but it has continued as Time Warner Cable, (s TWC) Charter Communications (s CHTR) and Cablevision (s CVC) have all reported major subscriber losses of their own.
No. 2 cable provider Time Warner Cable announced today that it shed 155,000 cable subscribers during the third quarter, which included 46,000 digital video subs. Yesterday, Charter Communications reported that it lost 63,800 basic cable subscribers during the previous quarter. And Cablevision said this morning that it shed 24,500 subscribers during the same period, including about 5,000 digital video subscribers.
Add that all together and you have more than 500,000 customers that left their cable providers last quarter, and that’s just data from four of the top five cable companies that have reported earnings. (No. 3 cable provider Cox Communications is privately held and therefore doesn’t have to announce its subscriber losses for all the world to see.) No doubt even more subscribers have left some of the smaller, non-public local and regional cable providers over the past few months.
|Company||3Q Sub Losses|
|Time Warner Cable||155,000|
So what can we make of this? Cable subscriber losses are obviously nothing new, and usually those losses are offset by subscriber gains at satellite and IPTV providers offering alternative pay TV services. In other words, Comcast and Time Warner Cable subscribers simply move on to become customers of Dish Network, (s DISH) DirecTV, (s DTV) Verizon (s VZ) or AT&T. (s T) And indeed, executives from Comcast, Time Warner Cable and others have pointed to a weak economy and increased competition as the main drivers behind their subscriber losses.
But a funny thing happened in the second quarter, when, for the first time ever, IPTV and satellite subscriber increases didn’t make up for cable losses. Cable providers lost a total of 711,000 subscribers in those three months, and 216,000 of those households did not sign up with other providers, deciding instead not to pay for multichannel video services at all.
That’s a trend we see continuing, particularly as cable subscribers continue to raise their bills at an incredible rate. Comcast reported on its earnings call that average revenue per user (ARPU) increased by 10 percent year-over-year, ending the third quarter at about $130 per month. Charter’s ARPU also rose about 9 percent, to $126. And while Cablevision’s reported average revenue per sub didn’t grow as fast as the others, it’s now a whopping $149.
All of which is why we think that the cord cutting phenomenon, which Comcast and Time Warner Cable deny is something that they’re seeing, is for real. From our point of view, expecting users to pay $125 to $150 a month, and continuing to raise those rates 5 to 10 percent every year, isn’t a sustainable business model. At some point, those users will find alternative, cheaper ways of getting the content they want, and now there are plenty of ways to do so.
For some tips on navigating life without cable, check out our new weekly video series, Cord Cutters, where we discuss the gadgets, tips and content available for those who have decided to do away with their expensive pay TV subscription.
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