SNL Kagan Forecasts Growth in U.S. Multichannel Video

Cable market share expected to decline, but the 2009 transition to digital will provide a boost

MONTEREY, Calif. — According to an updated projection from SNL Kagan, U.S. multichannel video services are expected to grow moderately over the next five years in a period that will be marked by increased competition for subscriber loyalty. The study, “U.S. multichannel projections,” explores the changes in multichannel market composition, the challenge to cable’s dominance and the impact of the February 2009 digital transition.

The SNL Kagan study projects annual growth of 2.1% for total multichannel subscriptions, reaching 108.5 million in 2012. Although market penetrations are reaching a ceiling, the total number of multichannel households is expected to increase, with multichannel subscribers accounting for nearly 89% of TV households in the five-year outlook.

The digital transition in February 2009 will increase multichannel subscriptions without generating a large-scale migration. SNL Kagan conservatively estimates that 10% of over-the-air households will opt for multichannel, with cable receiving the majority of converts and satellite and telco splitting the remainder.

Cable providers are expected to maintain multichannel market dominance but will face increased competition from the telcos and DBS offerings. SNL Kagan estimates that cable’s market share will drop from the current 64% to 59% in 2012. Telcos are expected to make the biggest strides, jumping from 3% to 9% during the same period. Small-dish satellite providers are forecast to lose market share due to unavailability of bundled voice/data packages and limits to on-demand delivery.

“Cable’s ability to prevent more rapid erosion to its subscriber base will depend on the migration to all-digital services,” says Ian Olgeirson, SNL Kagan senior analyst. “The ability to introduce enhanced services to a broader selection of subscribers and reclaim analog channels to free up bandwidth is going to prove critical to the long-term success for cable video packages.”

Studies such as “U.S. multichannel projections” are available exclusively as part of the SNL Kagan Information Service. For more information on this study and other media and communications data sets within the SNL Kagan Information Service, call 866.296.3743 or email SNLKaganSales@snl.com.

To learn more about SNL Kagan’s coverage of multichannel video, please visit SNL Kagan’s booth (#1314) at the 2008 NCTA Cable Show at Morial Convention Center in New Orleans from May 18-20.