Programmers see viewership fall as channel surfing behavior declines as cable subscriber levels decrease due to increase use of TV box top devices increases

The cable companies appear ready to accept their fate and begin offering on demand services to TV viewers tired of expensive cable bills. But the strategy likely to be employed is simply to shift from marketing the large number of channels they offer, to one in which consumers now have choice, but will have access to far fewer channels (unless they are willing to pay, in which case their bills will go even higher).

According to a report compiled by Leichtman Research Group, only Verizon’s FiOS service has seen a net gain in subscribers recently. So, facing what it sees as an irreversible trend, cable executives are ready to switch gears.

“The question is how do you take the programming that everybody wants and make it on demand,” CBNC reported Jeff Bewkes, CEO and chairman of Time Warner, saying at a recent conference. “That’s why the reaction is oversold, because the kind of pessimism or concern — if it was right — would mean the entire industry would never figure it out.”

While some have expected Apple to enter the fray, offering a low priced alternative to cable, it has faltered, unable to get the content providers to come on board. As TNM reported yesterday, one reason may be that Apple is falling behind its competitors in the space and may not have the leverage it has in other areas of tech.

But that has not stopped consumers from continuing to cut the cord. Higher cost, lower quality, and the growth of quality programming coming from such media brands as HBO and Netflix likely contributes to the trend – as does a soft economy.

A recent Nielsen report shows what impact this behavior is having on viewership on cable systems. According to Nielsen, A&E saw a 36 percent decline in viewership in July, while TNT saw a 22 percent decline. Nielsen pointed at a change in the way TV viewers watch programming – from binge watching, to using 3rd party devices, fewer TV viewers are watching TV though their cable subscriptions. This effects the cable companies, but it also is effecting networks that are not attracting viewers with shows where the viewer can watch a whole season in a compressed period of time.

While the cable companies may believe they are well positioned to start offering on demand services in place of large channel offerings, their ability to absorb the revenue losses could lead to a shake-out in the industry.

“Some companies are very well positioned, other media companies, traditional content players, maybe not so much,” said Mike Fries, CEO and president of Liberty Global.