Cable Keeps Dropouts in Check With Zombies on Smartphones

Zombies and dragons are helping U.S. pay-television operators stem the flow of customers dropping subscriptions.

Shows like HBO’s “Game of Thrones” and “The Walking Dead,” which plays on AMC, have limited defections, according to Brahm Eiley, president of Convergence Consulting Group Ltd. The Toronto-based researcher estimates the number of Americans who pay for TV through cable, satellite or fiber services fell about 188,000 in 2013, and will drop another 160,000 this year.

“What’s interesting is that they haven’t lost more, and that speaks to how well the TV access players have managed the declines by locking in must-see shows,” Eiley said yesterday in an interview.

Viewer losses have been prompted by a flood of TV shows and films available through online services like Netflix Inc. (NFLX) and Amazon (AMZN).com Inc. To combat the trend, the pay-TV industry has been developing its own online services, such as HBO Go from the Time Warner Inc. network, which let customers watch the newest episodes on tablets and smartphones.

More may be needed. Between people who have dropped pay-TV subscriptions and younger adults who’ve never signed up, along with economic factors, the industry lost about 1.25 million customers last year, according to Convergence. Another 1.17 million will join them this year, a trend Eiley describes as “negative.”

More Choices

Economic factors and a growing list of choices -- from Netflix and Hulu Plus to Amazon.com Inc. and new TV-streaming entrants that include Microsoft Corp. (MSFT) and Yahoo Inc. -- will make it hard for the pay-TV industry to reverse the trend, particularly as younger-generation viewers opt for the cheaper online services, Eiley said.

“You have a growing population in the U.S. but you don’t have a growing TV subscriber base any more,” Eiley said.

American cable TV customers on average pay $82 a month for service, compared with $7.99 for Netflix, Eiley said.

Amazon last week introduced its $99 Fire TV set-top box to compete with Apple, Google Inc. (GOOG) and Roku Inc. The machines also compete with cable boxes by combining a variety of online services in one place.

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net Rob Golum

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