The word is grim: Credit Suisse revised its forecasts, and instead of expecting cable television subscriptions to increase by 250,000 next year, they’re now predicting that the number of subscribers will fall by 200,000. And it’s not just that families are cutting the cord because it’s expensive. The number will go down because of a larger cultural shift, younger consumers who have decided that cable isn’t worth the money at all and are declining to subscribe in the first place, so they won’t replace older ones who are exiting the subscriber universe. That should be a much scarier proposition for the cable industry, but it’s an intriguing one for networks.

I remain pretty convinced that even if it takes a very long time to unbundle cable, and even if a bunch of networks die in the process, a move towards a more flexible (if not entirely a la carte) multi-platform system is inevitable. The idea that choice is paying for precisely what you want, rather than getting an enormous number of things — some of which you want and some of which you’d gladly see die in a fire — for your money seems pretty well-entrenched in the music industry now, and has always been the case for books. If I were HBO, I’d be pondering a subscription option for HBO GO only: I’m pretty sure I’d pay the $9-odd dollars I pay for my HBO package now for HBO GO only if I didn’t have cable.

For networks that don’t have the same premium branding as HBO or Showtime baked into their business model, and thus would have more difficulty attracting a core of subscribers used to paying for them separately, it’ll be interesting to see what happens. I can see something like Bravo making the jump to premium-lite status not because the content is astonishingly good but because the brand is so clearly defined. And I wonder if other networks will retrench their content offerings to try to keep the subscribers they have, or innovate to try to bring resistent cord-nevers into the fold. It’d be easier to do the former, but for the survival of the industry, much more important to innovate with everything to do the latter.

Some cable analysts think that as many as 10 percent of existing American cable subscribers will give up their subscriptions in favor of alternative television platforms by 2011. Now, a more conservative firm’s said they think it’ll be 4 percent by the end of the year and 10 percent by the end of 2015. And while the number of cable subscriptions may keep growing, it won’t be proportional to the overall growth of the potential market

The industry reversed the first-ever declines in the second and third quarters of 2010 to produce a small overall increase for the full year. The modest subscriber gain was neither convincing enough to dispatch the threat of cord cutting nor dismiss the impact of over-the-top substitution. At the end of 2010, we estimate 84.9% of the occupied U.S. households subscribed to a multichannel package after eliminating the overlap of customers with multiple subscriptions. The year-over-year dip from nearly 86% at the end of 2009 illustrates the potential peak in multichannel penetration.

Though we forecast continued absolute growth in subscribers, the pace is not expected to keep up with occupied household formation, leading to a long-term decline in penetrations for multichannel services. OTT substitution is the primary agent in the expected declines in traditional cable, DBS and telco video penetration. SNL Kagan estimates multichannel substitution via OTT delivery will grow from 2.5 million households at the end of 2010 to 12.1 million homes by 2015. The OTT substitution estimates account for nearly 10% of the occupied homes in the U.S. in the five-year forecast.

We’re at a moment of upheaval. The Parents Television Council’s filing briefs in cases challenging cable bundling. Even as alternatives to cable like Netflix get more popular, folks are complaining about the price increases that the company needs to support the contracts for content it’s renegotiating and attempting to expand, and we’re seeing the emergence of an actual competitive market in the alternatives to cable, as Amazon starts signing non-exclusive content contracts. I don’t know what the new landscape’s going to look like, or what company and technologies are going to win out, or where prices for content are going to land, which is part of what’s both exciting and frustrating about the moment that we’re living in. But if I were a cable company, I’d be very, very interested in giving my customers the impression that I was attentive to their concerns about price, customer service, and technological innovation to buy myself as much time as possible before cord-cutting hits hard and accelerates further.