Despite the OTT cord cutting threat, North American pay-TV subscriber losses won’t be as severe or damaging as some have feared, according to a new pay-TV subscriber forecast from Digital TV Research. Cable, satellite and telco pay-TV providers will lose 6 million subscribers across the U.S. and Canada by 2021 from a peak of 112 million in 2012, Digital TV Research predicts in the the fifth edition of the company’s ¨Digital TV North America¨ report.
On-demand subscription revenues will drop 12.1% to $98.1 billion from a 2015 peak of $111.64 billion, according to the Digital TV Research pay-TV subscriber forecast. Cable on-demand subscription revenues will fall $10.76 billion, those for satellite providers $2.13 billion, and telco IPTV on-demand subscription revenues will fall $0.65 billion, the market research provider highlights in a press release.
Pay-TV Subscriber Forecast
The forecast subscriber losses, though not life-threatening, are indicative of the growing threat competing video OTT services present pay-TV providers, Digital TV Research principal analyst Simon Murray explained.
“At first glance, this does not indicate a massive cord-cutting problem,” he said in the press release.¨However, the number of non-payTV homes will climb from 20.7 million to 33.3 million over the same period [as the number of households will continue to increase]. To put it another way, pay TV penetration will drop from 87.1% in 2012 to 80.3% in 2021.”
Realization of Digital TV Research’s forecast losses would propagate a declining trend that began at different times for cable, satellite TV and telco IPTV providers. “2015 was notable because subscriber losses were recorded for all of the major platforms: cable, satellite and IPTV. Cable has been losing subscribers since 2011. Satellite TV started in 2014, and IPTV joined them in 2015,¨ Murray commented.
Overall, North America’s pay-TV subscriber numbers dropped 2 million in 2015, Digital TV said. The bulk of the losses in previous years were attributed to the loss of analog cable TV subscribers, which continued to decline (by 1.1 million) in 2015, researchers noted. Also fueling the 2015 decline: IPTV subscribers saw a slight decline, while satellite TV subs fell 610,000.
Much of 2015’s drop in IPTV subscribers has been attributed to AT&T encouraging U-verse subscribers to switch to its DirecTV satellite service. That wasn’t sufficient to offset the loss of satellite TV subscribers, however, Digital TV Research points out.
Digital TV Research apparently doesn’t expect 2015 results to be repeated to the same extent moving forward, however. The research firm’s North American pay-TV subscriber forecast calls for fewer than 2 million subscribers to be lost between 2016 and 2021.
It’s also worth noting that another research firm — LRG (Leichtman Research Group) — found less pessimistic results for 2015. The 13 largest U.S. pay-TV providers – representing about 95% of the market – lost an estimated net 385,000 video subscribers in 2015, according to LRG.
