For Immediate Release
March 1, 2002:  New York, NY
 

• Households with any cable television connection drop to 60 percent of total U.S. households after reaching peak of 62 percent.
• Direct-Satellite households climb to 18 percent, a new peak.

New York –  March 1, 2002 – The percentage of U.S. households with cable television connections of any kind has declined significantly in the first months of this year, as the chart below shows.  This decline represents both a loss of market share for the cable industry and a real decline in the total number of households with cable television.  At the same time, households subscribing to one of the direct-to-home (DTH) satellite services (DirecTV or EchoStar) have increased to about 18 percent.

“Actual loss of household subscriptions is really unprecedented in the last 30 years in the cable industry,” said Greg Durkin, vice president and director of research for Alexander & Associates, Inc. (A&A).  The company released these findings, based on their on-going, in-depth weekly analysis of the home entertainment market.  “This signals an important change in the wired and wireless delivery of electronic entertainment to the home, just at the time when packaged goods delivery – in the form of DVD and VHS – is coming off its most successful year ever.”

Cable television penetration peaked at over 62 percent in 2000-2001, noted Mike Gorman, consultant and analyst with A&A.  “After holding steady at around those levels for several months, penetration began to decline noticeably in the first weeks of this year,” he said.  “Penetration declines in this case mean actual disconnects; this is a real net loss of subscribers for the cable community.”

Meredith Amdur, financial and business analyst with the company, noted that these declines are coming at exactly the time cable operators are pressing their subscribers to upgrade to digital cable service.  “There may have been underlying dissatisfaction with cable,” says Ms. Amdur, “but it took pressure to change the status quo from cable operators to actually lose those subscribers.”  Consumers are not rejecting digital service.  “All DTH service is digital service,” she noted, “and losses in cable subscribers are more than offset by increases in direct-to-home service.  It’s just that consumers are choosing a different provider.”  She noted that these findings present a sharp contrast to many recent Wall Street analysts reports that apparently do not have access to primary market information.

These changes may presage a significant shift in the prospects for broadband Internet service as well.  Digital cable with digital cable modem service has been presented as the home media delivery system of choice.  But satellite based direct-to-home service (which provides digital television channels and high bandwidth outbound Internet signals) with telephone based DSL upstream connections (or a separate two-way DSL connection from the local telephone company) apparently offers a successful alternative product.  “Our Advanced Media Community study last summer demonstrated the split in broadband connections,” said Mr. Durkin.  “DTH satellite households were much more likely to use DSL, while digital cable subscribers were more likely to use cable modem connections.”

Additional survey details are available on the Alexander & Associates website at www.alexassoc.com or by telephone to the office phone number.
 

About Alexander & Associates, Inc.
Alexander & Associates is a marketing and management consulting firm working with clients in the entertainment industries.  They are located in New York City.  Since 1987, they have produced Video Flash, the weekly home video market measurement instrument for studio and retail clients.  Among their special studies, they have recently released the report on the Advanced Media Communities project, a look at the media behaviors of households in five communities around the country that have every advanced home entertainment option.