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A watched pot has finally boiled.
The U.S. pay-TV industry suffered a subscriber decline in 2013, according to a report from financial services firm SNL Kagan. The contraction, the first ever for a full year, represents a long-anticipated turning point at which industry watchers can finally declare that the traditional cable model is in decline.
The details are more complicated, however, and provide an idea of why cable companies like Comcast have been working for years to expand into new businesses.
See also: 63% of Americans Turn to Netflix for TV Streaming
SNL Kagan found an overall loss of about 251,000 customers out of  100 million subscribers, approximately 0.2% of the market. However, two of the three segments of the multichannel market grew — telecoms (like Verizon FiOS) and satellite companies (DISH Network and DirecTV) — while traditional cable companies (such as Comcast) declined.
Cable companies have been struggling for some time. The industry still has 54.4 million "basic subs," but shed 1.7 million and 2 million customers in 2012 and 2013, respectively.
Before 2013, subscribers that left cable companies were more than offset by people joining satellite or telco systems. The SNKL Kagan study highlights that growth in the other segments has for the first time been unable to keep up with this decline.

Image: SNL Kagan
To understand why it is important to acknowledge the internal shift of pay TV customers as well as their overall decline requires a bit of history.
Choice has not always been a feature of the U.S. television industry. Prior to the '90s, cable television was dominated by regional operators that had effective monopolies over small regions.
The introduction of satellite TV in the '90s provided some of the first real choice for consumers, followed by telephone companies like AT&T and Verizon jumping into the mix.
Now with broadband internet offering services like Netflix and Hulu, consumers have more options than ever. The fact that the total number of pay-TV subscribers has finally begun to decline indicates that what was once a consumer movement within the industry has now broken out into other areas — presumably into cord cutting.
More choices means more competition, which in turn tends to lead to declining margins and falling profit.
This development explains why Comcast has been so eager to diversify away from its core cable business. Consumers aren't necessarily cutting back on their media spending or abandoning pay-TV in droves; they're exploring other options.
As the money goes, so does Comcast.
The media giant now includes a content creation business in NBC Universal, a home security service, an online ad distribution platform and a market-leading broadband business that added more customers in 2013 than any other company.
Not that Comcast is giving up on video content. The company has its X1 streaming set-top box, a Netflix competitor in Streampix and a possible merger with Time Warner Cable that should ensure it many years of revenue from the slowly contracting cable industry.
The trends do indicate that U.S. consumers are watching more content through the Internet, but television and the multichannel model still have a healthy lead. These changes take time. After all, as of 2012 more than half of U.S. TV owners still had a VCR.
Analysts may look back at 2013 as the high point for the U.S. multichannel industry, but this is misleading. Companies including Comcast had seen consumers beginning to explore other options well before then and began to plan accordingly.
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