Upfront - January 2013
LRG: Multichannel video industry essentially flat in Q3
Leichtman Research Group found that the 13 largest multichannel video providers in the U.S. – representing about 94 percent of the market – lost about 53,500 net additional video subscribers in Q3 2012. Quarterly net multichannel video losses in the third quarter were compared with a net gain of about 17,000 in Q3 2011 and a net loss of 28,000 in Q3 2010.
The top multichannel video providers account for about 94.6 million subscribers – with the top nine cable companies having more than 51.6 million video subscribers, satellite TV companies having 34 million subscribers and the top telephone companies having more than 8.9 million subscribers.
Other key findings include:
- The top nine cable companies lost about 420,000 video subscribers in Q3 2012, compared with a loss of about 505,000 subscribers in Q3 2011.
- The top telephone providers added 317,000 video subscribers in Q3 2012, compared with 307,000 net additions in Q3 2011.
- Satellite TV providers added 48,000 subscribers in Q3 2012, compared with a gain of 216,00 in Q3 2011.
- Over the past year, multichannel video providers added about 305,000 subscribers, compared with a gain of about 250,000 over the prior year.
“With a fairly saturated market, the multichannel video industry was essentially flat in the third quarter of 2012,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group. “This year’s third quarter was in line with recent years, with about 70,000 more losses than a year ago and about 25,000 more losses than two years ago.”
TDG: Cable needs to nab the cord-nevers
New research from TDG Research finds that 13 percent of broadband subscribers – some 11 million households – do not subscribe to cable-like pay-TV services. TDG's latest report, “Pay-TV refugees: A primary profile of cord-cutters and cord-nevers,” offers a detailed profile of this small but growing segment of home entertainment consumers.
"According to our tracking research, the percent of broadband households doing without pay-TV has increased from 9.5 percent in late 2010, to 11.2 percent in late 2011, to 12.5 percent today," noted Michael Greeson, TDG’s founding partner and director of research. "Though pay-TV operators rightly argue that OTT's impact on basic video subscriptions has been negligible, when one focuses exclusively on broadband subscribers – those most likely to have access to OTT services – the numbers tell a different story."
TDG separates pay-TV refugees into two segments: cord-cutters (broadband users that once subscribed to pay-TV but no longer do) and cord-nevers (broadband users that have never subscribed to pay-TV). Though they share obvious dispositions (they both subscribe to broadband but not pay-TV), these two segments exhibit radically different profiles. Cord-cutters, for example, are a bit older, enjoy higher annual incomes and are more likely to have children under the age of 18 living in the home. Conversely, almost a third of cord-nevers are between the ages of 18 and 24, more than half have annual incomes under $30,000 and only one-fifth have children under the age of 18 living in the home.
While TDG expects the number of pay-TV refugees in both segments to increase over the next five years, it is cord-nevers that are the most immediate challenge for pay-TV operators. Why? Well, today's young consumer is more technologically sophisticated than their predecessors, especially when it comes to entertainment. These pay-TV prospects are fully aware of the existence and costs of such services. They understand the benefits and limitations of the online alternatives.
"Spending $80-$100 per month for a pay-TV service, though enjoyable, is more of a luxury than a necessity. And by combining free over-the-air broadcasts with a couple of $8-per-month OTT subscriptions and free online video, they can easily create an imperfect but sufficient substitution solution. And many will."
Ericsson: Smartphone uptake, mobile data traffic increasing rapidly
The latest Ericsson Mobility Report, formerly known as the Ericsson Traffic and Market Report, reveals that approximately 40 percent of all phones sold in Q3 2012 were smartphones. Also, data traffic doubled between Q3 2011 and Q3 2012 and is expected to grow at a compound annual growth rate (CAGR) of around 50 percent between 2012 and 2018, driven mainly by video. The growth of smartphone data traffic is expected to exceed the overall average.
Ericsson's research shows that online video is the biggest contributor to mobile traffic volumes, constituting 25 percent of total smartphone traffic and 40 percent of total tablet traffic. This puts new requirements on networks to cater for quality anywhere and anytime.
Douglas Gilstrap, senior vice president and head of strategy at Ericsson, said: "Expectations of mobile network quality have been elevated by the availability of smartphones and tablets that have changed the way we use the Internet. Mobility is becoming an increasingly significant part of our daily lives; we always have devices within arm's reach, allowing us instant access to information, entertainment and social interaction."
Total mobile subscriptions are expected to reach 6.6 billion by the end of 2012, and 9.3 billion by the end of 2018. These figures do not include machine-to-machine (M2M) subscriptions. China alone accounted for about 35 percent of net additions during Q3, with about 40 million additional subscriptions. Brazil (9 million), Indonesia (7 million) and the Philippines (5 million) followed in terms of net additions. Overall, global mobile penetration reached 91 percent in Q3 2012, and mobile subscriptions now total around 6.4 billion. Mobile subscriptions have grown by around 9 percent year-over-year and 2 percent quarter-over-quarter.
By mid-2012, LTE coverage was provided for an estimated 455 million people globally. Within five years, more than half of the world's population is expected to benefit from LTE coverage. LTE is currently being deployed and built out in all regions, and total subscriptions will increase from around 55 million at the end of 2012 to an estimated 1.6 billion in 2018. WCDMA/HSPA networks currently provide coverage to more than half of the world's population and continue to grow faster than LTE in terms of absolute numbers, adding 65 million subscriptions in Q3 2012, compared with 13 million for LTE.
IIA: Americans can save money thanks to the Internet
Broadband-enabled savings increased nearly $1,200 per American household from last year, the Internet Innovation Alliance (IIA) announced recently. Online savings for U.S. consumers grew from $7,694.56 to $8,870.01 annually, with the U.S. Bureau of Labor Statistics reporting that average annual expenditures rose 3.3 percent in 2011.
The upswing in consumer spending was the first increase since the 1.7 percent rise from 2007 to 2008, as expenditures declined in 2009 and 2010. The IIA-identified cost savings – achieved by having access to and using high-speed Internet – are detailed in the 2012 financial report by Nicholas Delgado, “Next-generation networks and top 10 consumer savings now.” Delgado is a certified financial planner and principal of wealth management firm Dignitas.
“More and more, consumers are realizing that the Internet is an essential ingredient for keeping more money in their pockets year-round, with deals regularly available and many online retailers making value their central differentiator,” Delgado said.
According to new research from Forrester, 57 percent of online adults in the U.S. shop more with retailers that offer free shipping.
“These money-saving tactics are critical in a challenging economy and are contingent upon access to high-speed broadband,” said Bruce Mehlman, founding co-chairman of the IIA. “Transitioning to next-generation networks is crucial for all Americans to be able to make the Internet part of their financial strategy.”