A U.S. cable industry revenue forecast from SNL Kagan sees bright prospects ahead for the industry over the next 10 years despite threats from OTT video service providers. Revising its previous 10-year outlook slightly higher, the S&P Global Market Intelligence unit sees revenues growing for both U.S. cable companies’ video and broadband services from 2016-2026.
SNL Kagan analysts see the opportunity to bundle services as contributing to a slightly improved outlook for cable company video revenues, while a new generation of DOCSIS cable modem technology provides them with a competitive edge in a U.S. broadband market that’s experiencing a flurry of fiber gigabit broadband activity.
U.S. Cable Industry Revenue Forecast
SNL Kagan forecasts residential cable industry revenues will rise from $108.38 billion in 2016 to $117.7 billion in 2026, a $9.32 billion increase over the 10-year period. Growth in commercial services revenues will push total industry revenue from $130.57 billion to $140.99 billion, a $10.42 billion increase.
Additional highlights from SNL Kagan’s 10-year U.S. cable industry revenue forecast include:
- Subscriber Growth: Broadband subscriptions are forecast to swell by more than 8 million over the next 10 years, reaching 71 million, and coming in at more than 1.6x the number of video subscriptions
- Less Dramatic Decline: Basic video subscriptions are projected to drop by an annual compounded growth (CAGR) rate of 1.5% to 45.4 million by 2026, slower than the 1.7% CAGR in last year’s 10-year projection
- Cord-Shaving Worries: Mounting anxiety around reduced spending on multi-channel video has been most evident in the advanced services. Combining basic cable and advanced services, SNL Kagan anticipates total revenues generated from residential video services to fall at a CAGR of -0.5% over the next 10 years, totalling $55 billion annually in 2026
- Advertising Strength: Despite a decline in net subscribers, net advertising revenue is expected to grow at a 4.3% CAGR through 2026 to reach $6.3 billion
“Like many industries, cable isn’t immune to shifting preferences, but continued growth in broadband may propel revenue growth on both the residential and commercial end,” said Tony Lenoir and Ian Olgeirson, the SNL Kagan researchers behind the report. “Despite ongoing declines in video, the next 10 years look pretty good for this sector.”
Cable companies’ share of the U.S. broadband market is growing substantially and contributing to growth and increasing fixed broadband penetration across the U.S., according to a June report from Strategy Analytics. Collectively, cable providers added a net 3.3 million new broadband subscribers in the 12 months from April 2015 to April 2016, according to the market research provider.
Prospects aren’t as clear in the U.S. video services market. No less than ¼ of U.S. TV households have chosen to forgo cable or satellite pay-TV services, according to the GfK Home Technology Monitor 2016.
