Cable Subs Take Big Hit — Is Online Video to Blame?

Is online video taking a bite out of cable subscriptions?

Cable operators lost 741,000 basic video customers in third-quarter 2010, the single largest quarterly dip for cable, per a new SNL Kagan analysis.

Cable MSOs’ share of video subscribers dropped to 60.3 percent, compared to 62.9 percent a year ago.

The total pay TV segment (cable, satellite and telco) fell by 119,000 customers in the quarter, compared to a 346,000-subscriber gain in third-quarter 2009.

The third-quarter drop-off marks the second consecutive quarter of declines for the business. In the past two quarters, the multichannel market fell 2.3 percent to just over 100 million subscriptions.

Though operators blame the economy and high unemployment, Ian Olgeirson, senior analyst at SNL Kagan, believes other factors are at play.

“It is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages,” Olgeirson said.