TMCnews Featured Article

The growing adoption of broadband combined with a dramatic push by content providers to promote online video has helped to pave the way for mainstream audiences to embrace online video viewing.

Streaming entertainment allows for people to bypass their cable providers entirely, giving users the ability to watch or download their favorite TV shows and movies exclusively online. Now, hanging in the balance is the question of how this will affect cable companies and, subsequently, the customers who do subscribe to TV services.

According to a study by Pew Internet, movie and TV show video viewing rose from 16 percent to 32 percent of adult Internet users and that was in 2010. As online content becomes more widely available, the need for cable boxes and a subscription are becoming more obsolete.

The Associated Press reported today that analysts view this trend as bad for not only the cable companies, but the subscribers as well. They feel it will lead to “more restrictions” and more expensive packages for online video viewing and broadband access as the need for more bandwidth increases.

In regards to Time Warner (News - Alert), the company lost 16,000 net subscribers in the latest quarter, bringing its base to 26.9 million. The company also lost 130,000 residential video customers.

CNET reports that this trend could be due to what is known as “cord cutting,” in which subscribers ditch their cable subscriptions and keep their Internet subscriptions, thus relying on the Internet to view, download and stream their preferred content.

“TWC and other cable operators pay TV networks and film studios top dollar for their content. That's one of the reasons why we're seeing big media companies begin to limit the availability of shows and films available online for free or on the cheap. The Web is undercutting cable,” writes CNET.

Analysts feel that the economy coupled with increasing fees are to blame for all the subscriber losses. 13 percent of U.S. households that don't subscribe to some form of pay-TV service, about 60 percent have broadband. Online video is not a found variable as a reason for dropped subs.

“It is erroneous to think of this group as making decisions driven by online video,” said Bruce Leichtman, president of Leichtman Research Group Inc., reports AP. “These decisions tend to be more based on economics.”

The firm called 1,500 households for the survey, which had a margin of error of plus or minus 2.5 percent.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO (News - Alert) offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.