By Shalini Ramachandran 

Cablevision Systems Corp. Chief Executive James Dolan said the number of customers paying for the traditional big bundle of TV channels is going to shrink by about 20% to 25% over the next five years, as consumers opt instead for smaller packages of channels or online video options.

Mr. Dolan warned an investor conference Tuesday that the reduction in subscribers is "going to have an impact on the programmers" -- the big media companies that collect fees for each customer who receives their TV networks. For operators such as Cablevision, selling higher-margin broadband service could help make up for dwindling video customers.

The shift is spurred, in part, by channel owners themselves going "over the top" and selling online video services directly to consumers, such as Time Warner Inc.'s Web subscription to HBO Now and similar offerings from CBS Corp.'s CBS and Showtime. Those products are going to become "more and more attractive to customers," Mr. Dolan said.

Big television channels have already lost millions of customers from cord-cutting (abandoning traditional pay TV altogether) and cord-shaving (downgrading cable packages to inexpensive, skinnier bundles from cable and satellite TV providers like Verizon FiOS and Dish Network Corp.). A Wall Street Journal analysis of Nielsen data last year showed that the top 40 most widely distributed channels in 2010--networks such as CNN, ESPN, and USA--had lost an average of 3.2 million subscribers, or more than 3% of their distribution, over the previous four years.

Cablevision has joined the skinny bundle trend. In April, Cablevision launched low-cost, "cord-cutter" packages with broadband service and a free digital antenna to pick up local TV signals.

Mr. Dolan said popular channels will do "just fine," especially if they have lots of original and scripted content. But lesser-watched and niche channels--which have benefited from being packaged together in a big bundle with more popular channels--are going to have a harder time.

"You're not essential anymore," he said.

Mr. Dolan has been outspoken about his belief that cable operators may one day stop selling video services, focusing instead on broadband service. Over the past year, the trend of operators adding Internet subscribers and losing video customers has accelerated, he said.

As a result, Cablevision has shifted its focus to boosting the reliability and speeds of its "connectivity" products, including with a new Wi-Fi-only mobile phone offering. Internet service is more profitable than cable television because it doesn't carry big programming costs.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

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