Based on the number of total subscribers at the end of the period, cable clung to 55 percent of the U.S. pay-TV market, satellite held 34 percent and IPTV had an upwardly mobile share of 11 percent.
US Pay TV Subscriber Trends (Net Gains/Losses in Subscribers, August 2013)
Net Gain (Loss)
Pay TV overall Q2
Pay TV overall 1st half
Pay TV overall 2013 forecast
Source: IHS, August 2013
The main culprit for the pay-TV market’s decline was the cable segment’s loss of 588,000 subscribers, says the report. While that was slightly better than the 598,000 customers that cable shed during the same time last year, the decrease still represented a major plunge for the embattled business. Meanwhile, satellite’s decline widened to 162,000 subscribers, up sharply from 62,000 a year ago.
Erik Brannon, analyst for U.S. television at HIS, says “… the IPTV sector is enjoying growth, especially in urban areas where it is luring subscribers away from satellite… satellite’s lack of a true high-speed Internet service… or a triple-play bundling option… a disadvantage when competing against IPTV and cable.
The internecine fight among the three rival segments is particularly acute because the overall base of potential new subscribers is diminishing over time. The decline in the second quarter means that the total number of U.S. pay-TV subscribers will contract by 146,000 during the initial six months of the year, the first time ever that the industry began the first half of a year with a net loss in pay-TV customers. The report projects an annual decline in total U.S. pay-TV subscriptions in 2013. Subscribers are set to decline to 100.77 million, down from 100.89 million last year.
The market’s decline can be traced in part to the growing number of those who object to ever having a pay-TV subscription, and instead get their TV programming exclusively via over-the-top services like Netflix or through other sources. Equally as important, the price of a typical pay-TV subscription remains high, staying well out of reach for a number of consumers. IHS believes that consumers are likely to opt to keep their cellular and high-speed data service over a pay-TV subscription.
Both cable and satellite are exploring opportunities to diversify services, including new paradigms to deliver content to the home and even completely new fields like home-monitoring services. For instance, DirecTV will be the latest pay-TV provider to offer services related to home security via a recent acquisition engaged in that market, to provide a new revenue stream, offering significant upselling opportunities that come in the presence of a video installation.
Other potential revenue boosters for cable and satellite providers, says the report, include “TV Everywhere” that allows content to also be accessed on computers, smartphones and tablets; and initiatives like Cox Communications’ flarewatch, the first pay-TV-owned broadband-delivered IPTV service.
For more information from IHS, please visit here.