Cable operators in the U.S. have been experiencing subscriber losses for the past year or so--nothing terrible, but enough to raise eyebrows. Satellite providers haven't done much better: Dish is losing subscribers, and DirecTV is barely holding even. Verizon and AT&T entered the market about two years ago with FiOS and U-Verse respectively, but their gains don't completely explain the losses from other service providers. And, as I discussed in a previous post, AT&T is literally giving away money to get people to try U-Verse, so its rate of market growth must have tapered down to almost nothing. So, what's really happening?
I've got to admit that I don't know; all I can do is speculate. Television viewing in general is declining, as people find more and more things to do with their time. The increase of video content on the Internet can substitute for programming available on television. DVDs provide an evening of entertainment for as little as a dollar. Video services in the U.S. are relatively expensive relative to many other countries, including most of Europe and Asia. For cash-strapped families, premium packages are simply too expensive for the value they offer.
With all of the other options available, are the video services becoming luxury items rather than necessities? I think that they're becoming just that for many people. The switch to digital broadcasting might actually accelerate the change, if broadcasters aggressively program their subchannels and insure a good signal throughout their coverage areas. I expect to see cable, satellite and IPTV operators all lower their prices significantly, although it might require subscribers to call in order to find out about the better deals. In fact, it could start looking like the long distance telephone market several years ago, when subscribers played one company against the other in order to get the best rates.