Cable Catch-Up.

Satellite TV continues to creep up on cable in the battle for subscribers, according to a new report from J.D. Power and Associates.

The penetration of satellite subscribers among US households has risen steadily since the mid-’90s, with great strides made in the past year. Whereas subscriptions stood at 12% in 2000 and 19% in 2004, 27% of all US households will subscribe solely to satellite TV in 2005, according to a new report from J. D. Power and Associates. Satellite subscriptions still trail cable TV subscriptions, but cable TV penetration has been declining, from 66% in 2000 to 62% in 2004 and 60% in 2005.

J.D. Power also found that average customer satisfaction with satellite services tops that among cable customers, but noted that satellite customer satisfaction declined this year, while cable customer satisfaction rose. “Overall, satellite customers are still more satisfied with their service than cable subscribers,” said Steve Kirkeby, senior director of telecommunication research for J.D. Power. “But if satellite providers want to continue to attract subscribers away from cable, customer satisfaction is a critical area where they can’t afford to lose ground.”

Digital TV could also pose a challenge for satellite providers. Based on eMarketer’s newest estimates, cable and satellite companies each claimed about 25 million digital TV households in 2004, but cable will start to pull away in 2005 and will account for over 20 million more DTV households by 2009.

Both cable and satellite providers hope to convince their customers to use DVRs, which create additional revenue opportunities for the providers. Although there are over twice as many cable households as satellite households in the US, just about one-third of DVR households in the US use a service provided by cable, compared to 50.5% who get satellite-based DVR services and 18.9% who use TiVo or another standalone box.

While just 12% of those surveyed by J. D Power said they currently own DVRs, over 40% feel they are likely to own one in the future, meaning that there is plenty of room for providers to expand their DVR customer base.