Europeans Cutting the Cord; Will Americans Follow?

We at NewTeeVee are big believers that cord cutting is real, and it’s just a matter of time before average consumers begin to find free or cheap alternatives to their expensive monthly cable bills. The trend has been slow to take shape in the U.S., but the cable and satellite industry here has begun to show some weakness, with the first-ever decline in pay TV subscribers last quarter. However, data from the European Union shows that cable subscribers there have already decided to stop paying for cable TV services en masse.

Strategy Analytics reports that in the European Commission’s latest household communications survey, there’s evidence that consumers there are transitioning away from pay TV services and opting for free alternatives instead. According to the survey, the percentage of EU households paying for cable TV fell from 34 percent in 2008 to 30 percent in 2009, which is a loss of around 8 million cable subscribers in a year.

So where’d those subscribers go? It’s not that they’re no longer watching TV — they’ve just found alternative ways to do so.

Some of those viewers are still paying for TV, but paying different services. The number of EU consumers watching TV via satellite increased 2 percent, to 24 percent of households, while IPTV penetration in that period also increased from 2 percent to 4 percent.

However, the biggest gainer wasn’t another paid service, but free, over-the-air TV. The share of households that viewed digital terrestrial services increased from 12 percent to 23 percent in that time, while the share of analog terrestrial viewers fell from 41 percent to 34 percent. That means that it’s not just those watching analog signals switching to digital TV antennas, but those that had formerly subscribed to cable are now also tuning in to digital over-the-air signals.

Of course, the drop in cable subs has been more pronounced in some geographies than in others, but the decline in the Benelux countries has been particularly shocking. Strategy Analytics reports:

Cable’s decline has been little short of dramatic in Benelux. For years, visitors to those countries were told that the “only” way to receive television was through a cable network. Even though cable TV penetration strictly speaking never reached the 100% mark, it was certainly in the 90%+ range for many years. Now, according to the viewers themselves at least, cable is used by only 69% of Belgian households, a decline of 18% in one year. This was mirrored precisely by the increase in digital terrestrial usage over the same period. In the Netherlands, cable usage fell to 75% of homes, with digital terrestrial at 21% by the end of 2009.

In the U.S., fears around TV viewing being replaced by over-the-top video have been much more prevalent than concerns over viewers using digital antennas. And while the use of free, over-the-air signals in Europe has always been higher than in the U.S. — at least in recent decades — the number of former cable subscribers taking to digital antennas could be a model for Americans wishing to access some linear TV programming without having to pay for it.

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