• U.S. Broadband ISPs Add 1.2 Million Subscribers in Q1 '14, Most in 2 Years

    The top 17 U.S. broadband ISPs added nearly 1.2 million subscribers in Q1 '14, notching the best quarter of growth since Q1 '12 (see chart below). These ISPs now have 85.5 million subscribers, with top cable operators accounting for nearly 59% or 50.3 million and top telcos accounting for 41% or 35.2 million. The data is according to Leichtman Research Group.

    The top cable operator ISPs garnered 83% of the quarter's 1.2 million subscriber additions, vs. just 17% for the telcos. This compares with Q1 '13, when the top cable operator ISPs took 72% of net additions, with telcos taking 28%. LRG notes that Q1 subscriber additions historically account for more than Q2 and Q3 additions combined.

    The 85.5 million total broadband subscribers compare with 95.8 million total pay-TV subscribers in the U.S that LRG reported yesterday. With the broadband subscriber base now nearly 90% of pay-TV's, broadband has become a massive, bona fide new video distribution platform.

    This new platform is the underpinning of online video's surging usage. As broadband has gone mainstream, what's noteworthy is how the online video experience is moving from short-form on computers to long-form in the living room. For example, Tremor Video recently found that 83 million Americans now watch video on connected TV devices. As well, Sandvine recently disclosed that Netflix is now up to 34.2% of all bandwidth usage during primetime.

    I expect long-form online video usage on connected TVs is only going to grow going forward as more and more of the 85.5 million+  broadband homes hook up an Apple TV, Chromecast, Fire TV, Roku, Xbox or any number of other devices to their TVs, especially as the quality and range of online video continues to improve. Advertisers' embrace of high-quality online originals adds a crucial monetization layer for all of this.

    In a sense, a parallel world of long-form viewing is being built next to traditional pay-TV's. Figuring out how to respond to this trend is one of pay-TV's biggest challenges and potentially biggest opportunities. Again, this is why the AT&T/DirecTV deal seems so backward-looking; it seems to do nothing to help accelerate the companies' ability to tap into broadband/online video's growth. Rather it makes the combined entity even more dependent on traditional pay-TV, at a time when it's increasingly vulnerable.

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