Skip to main content

Cable MSOs Broaden Revenue Diversification


Cable TV's penetration rate is expected to erode ever so slightly in the next decade -- as the telcos join satellite TV in a dog fight for basic subscribers -- but Kagan Research believes that cable MSOs will still prosper. Cable is adding new revenue streams that will keep it a healthy growth business.

Kagan estimates cable residential revenue -- forecast to be $68.2 billion in 2006 -- will reach $120 billion by 2016. That doesn't include additional revenue from business customers. The gains are expected despite penetration for cable TV video services as a percentage of all residential TV households slipping slightly from 58.6 percent this year.

Cable telephony and high-speed cable modems get the most attention among add-on cable services. But the list is much longer: digital video recorders, high definition channels, video on demand and interactive TV.

"Cable thrived despite stiff competition from satellite TV for a decade," notes Robin Flynn, senior analyst with Kagan Research. "Now telcos have arrived too, but cable is bulked up and remains well positioned. Competition increases, but so does the revenue pie with these additional services."

Ms. Flynn predicts that average revenue per (cable subscriber) unit including all services is expected to climb from $87.04 per month in 2006 to well over $140 by 2016. I believe that this assessment is very optimistic. I'm guessing that she has not taken into consideration any losses associated with the continued growth of over-the-top video distribution services.

Moreover, armed with an IPTV service that closely follows the legacy programming model of the incumbent pay-TV providers, the telcos will have little choice but to ignite a new round of price wars -- in order to attract and retain subscribers beyond the first wave of early adopters. Again, this is not a 'business as usual' scenario.

Popular posts from this blog

How AI Impacts Data Workload Investment

The importance of data in today's business landscape fundamentally reshapes how CIOs invest in their IT infrastructure. A recent International Data Corporation ( IDC ) market study highlights this trend, revealing insights into spending patterns. The study indicates that structured database and data management workloads are the largest spending category within enterprise IT infrastructure. This is unsurprising, considering the foundational role these workloads play in managing digital business data. However, IDC's worldwide market study also sheds light on a noteworthy shift – spending in some categories witnessed a slight decline in 2023 compared to 2022. Data Workload Market Development This dip could be attributed to several factors. Organizations might optimize their existing data management processes, potentially leveraging more efficient storage solutions or cloud-based data management services. Additionally, the rise of alternative data sources, such as unstructured and