IPTVThe rapid emergence of over-the-top (OTT) and Internet TV alternatives, as well as cloud services, has posed stiff challenges for U.S. pay-TV service providers in recent years. Having experienced a 0.58% decline in subscriber numbers in 2013, the pay-TV subscriber base will grow in 2014, albeit at a tepid pace, according to a new report from Strategy Analytics.

Pay-TV subscriber numbers will increase 0.14% this year, Strategy Analytics forecasts in its “North America Digital Television Forecast: 1Q 2014.”

IPTV “will be the bright spot” in the pay-TV market, with subscriptions rising 17.5% year-over-year. The growth will continue, the market research company continues, with U.S. pay-TV’s IPTV subscriber numbers increasing at an 8.3% compound annual growth rate (CAGR) through 2019.

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The two leading U.S. IPTV providers – AT&T and Verizon – “are approaching the future with different strategies, but both are focused on driving advanced services and multiplay bundles with digital television and high-speed Internet at the core of their packages,” Strategy Analytics notes.

Turning to cable pay-TV providers, the rollout of the Xfinity X1 platform has reversed a downtrend in Comcast’s subscriber base.

With consolidation, viz. the pending Comcast-Time Warner merger, should come “faster digital transitions and a wider deployment of technology platforms,” which in turn should provide subscribers with more in the way of accessing content anytime, anywhere across multiple devices, Strategy Analytics continues.

“Comcast has become a technology leader with its Xfinity X1 and X2 platforms as well as the RDK,” director of Strategy Analytics’ Service Provider Strategies service Jason Blackwell was quoted in a press release. “This is driving a global trend where operators with advanced gateways and services have seen subscriber growth, better customer retention, and higher average revenues per user.”

“The digital transition has been a double-edged sword for the cable industry: average revenues have risen, but higher prices have squeezed out some customers,” added Eric Smith, analyst, Digital Consumer Practice. “We expect to see these customers return to pay-TV gradually, albeit with different packages or different services than those they left, and IPTV services in particular stand to gain the most.”

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