Cable operators have been bleeding out basic video subscribers over the past few years, and a research firm predicts that satellite pay TV revenues will exceed cable’s for the first time by 2016.
“Ongoing challenging economic conditions in the key revenue-generating markets of North America and Western Europe have resulted in slowing subscriber and revenue growth in the cable TV market,” said Jeff Heynen, directing analyst for broadband access and pay TV at Infonetics Research. “Subscribers are far less loyal than they used to be. The cable TV industry is characterized more by churn than cord cutting, as subscribers take advantage of introductory pricing on satellite and IPTV subscriptions that’s 30-50 percent below their cable bills. DirecTV, Verizon, AT&T, and Virgin Media have all set their sights on existing cable subscribers, and they’re seeing their subscriber bases increase as cable TV subscriptions shrink.”
Cable operators are attempting to combat the basic video subscriber losses with promotional efforts of their own, such as the quad play deals that Comcast, Time Warner Cable, Cox Communications and Bright House Networks have with Verizon Wireless.
On its third quarter earnings call earlier this month, Time Warner Cable executives acknowledged that the company’s loss of video subscribers were due in part to promotional efforts from the likes of Verizon and AT&T, but said they’ve worked on offering their own bundled promotions along with improved sales training. Cable operators are also attempting to reduce churn by offering TV Everywhere services.
According to Infonetics, cable subscribers still make up the lion’s share of pay-TV subscribers—at 60 percent in the first quarter of this year—but the growth in the telco IPTV segment was strongest with a 19 percent increase year-over-year in the first quarter of 2012.
Verizon and AT&T were neck-and-neck for revenue share in the growing telco IPTV market, followed by France Télécom and Deutsche Telekom in Europe and NTT and CTC in Asia.
On a macro level, the global pay-TV market, which includes cable, satellite, and telco IPTV, totaled $137 billion in the first half of this year, which was a 9.4 percent increase over the same time frame a year ago. The number of global pay-TV subscribers will reach 719 million this year, which will be a 6 percent increase over 2011.
Global pay-TV service revenue was forecast by Infonetics to grow at a 7 percent CAGR from 2011 to 2016, spurred by emerging markets Brazil, Argentina, Mexico, Russia, India, and China. Latin America, the smallest but fastest-growing pay-TV market, was on track to jump 23 percent this year to top $23 billion.