SNL Kagan Forecasts Growth in U.S. Multichannel Video

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

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.

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.

About SNL Kagan
SNL Kagan is a comprehensive resource for financial intelligence in the media and communications sector, including the broadcasting, cable, entertainment, motion picture, telecom, wireless, satellite, publishing and new media industries. The SNL Kagan suite of products integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. For more information, visit: http://www.snlkagan.com.

About Kagan Media Appraisals
Kagan Media Appraisals, the consulting arm of SNL Kagan, offers custom studies, white papers, briefings, business plans, research reports and appraisals from SNL Kagan’s team of expert analysts. KMA is recognized industrywide for actionable advisories, expert opinions, best practices, regulatory assessments and market data. Contact KaganConsulting @ snl.com or 831.624.1536 for more information.

SNL Contact
Monica Jenkins
Marketing Manager
Tel. 434.951.6951
mjenkins @ snl.com

SNL Financial
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Charlottesville, VA 22902
434.977.1600

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