Analysis for 'Needham '

  • Analyst: TV Unbundling Would Slice 50% Of Industry's Revenue

    Investment firm Needham & Company has released its latest Future of TV report, with lead analyst Laura Martin concluding that the biggest current risk to the TV industry's economics is unbundling of subscription TV channels. Martin asserts that if consumers had the option to choose their channels on an a la carte basis, rather than the multi-channel bundles that pay-TV operators currently offer, approximately 50% of today's TV revenue would be eliminated with fewer than 20 TV channels surviving.

    The draconian forecast adds a financial dimension to the ongoing debate around whether the TV industry will need to radically re-think its business approach if - and it's still a big "if" - cord-cutting gains momentum. To date cord-cutting (and "cord-nevering," where younger viewers simply don't subscribe to pay-TV as in the past) have been relatively muted, with estimates for 2012 in the 500K range. However, several key industry trends such as the escalating cost of pay-TV, changes in consumer behaviors, proliferation of connected and mobile viewing devices, the surge in OTT SVOD adoption (e.g. Netflix) and DVR-based ad-skipping all suggest that the industry's traditional bundled model could be tested over the next few years.

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