pay tv growth 2012Canada’s pay-TV market will reach the saturation point this year, prompting the country’s cable, satellite and IPTV service providers to seek new growth opportunities, according to an IHS Screen Digest report.

Pay-TV subscriptions will encompass 92% of Canadian television households in 2012, an all-time high. Pay-TV penetration will then decline just slightly in ensuing years– to 89.9% by 2016– as a result of increasing competition from over-the-top (OTT) services, according to an IHS Screen Digest Television Intelligence Monitor Market Report.

“The inevitable maturation of Canada’s pay-TV industry has finally arrived,” commented IHS analyst for television research Rik Brannon. “The country’s pay-TV operators are feeling the impact of economic woes spurred by the recession that recently ended in the United States. OTT players like Netflix are playing a role in the cessation of pay-TV subscriber growth.”

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TV household pay-TV subscriptions peaked three years ago in the U.S., IHS notes. Delayed economic effects and severe data caps implemented by cable companies led to a later peak in Canada.

On the hunt for new growth opportunities, Canadian pay-TV service providers are looking for new ancillary businesses capable of boosting declining subscriptions. Among those being considered are Wi-Fi and cellular services, according to IHS.

Cable companies continue to dominated Canada’s pay-TV market space. Nonetheless, they’ve been suffering declines in basic video subscriptions since 2011, IHS points out, losing market share to “…upstart IPTV players, such as Telus and Bell Canada. Telus and Bell’s Fibe TV are increasing their subscribers at a breakneck pace, even at the expense of satellite,” IHS analysts note.

Satellite pay-TV operators dominate in Canada’s rural areas, and that will continue to be the case, IHS says. They’ve also added IP video-on-demand (VoD) services to customers who have high-speed data (HSD) connections. Growth in this area can be marginalized, however, as some households that have HSD lines got them via cable providers.

IHS expects satellite pay-TV operators to produce mixed quarterly results, with the group overall expected to add subscribers slowly through 2016. While Shaw continues to strengthen its satellite fleet with a planned launch to add HD channel capacity, Shaw Direct suffered a surprise quarterly decline in pay-TV subscriptions recently—its first since 3Q and 4Q 2004. IHS expects declines at Bell Satellite TV as the company migrates its customers to its Fibe TV service.

IHS sees IPTV service providers as being the best positioned with regard to pay-TV subscriber growth in Canada. Their ability to offer aggressive promotions, roll out fiber-to-the-home (FTTH) connections and expand the number of homes passed should serve them in good stead in coming years, according to IHS’ analysis.

Canadian pay-TV operators are better positioned to fend off Netflix’s market challenge, IHS believes. The severe data caps cable companies impose on customers means that capacity limits “are easily reached with significant OTT video consumption.”

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