Global pay-TV subs increase, but don’t pop the bubbly yet

By Jim O'Neill on Apr 04 2016 at 9:30 AM
Global pay-TV subs increase, but don’t pop the bubbly yet

A new report contends that pay-TV operators saw their highest overall rise in the number of pay-television subscriptions around the world for the past two years.

But the Dom Perignon still hasn’t replaced the Alka-Seltzer in most mature markets like North America and Western Europe where growth is far less robust. In fact, in North America specifically, pay-TV household penetration is forecast to decline to 80% from its current 87%.

The quarterly Multiscreen Index -- from informitv -- reports that most of the 100 operators it tracks gained subscribers, more than 8.16 million of them in the last quarter of 2015, an increase of more than 2%.

“A quarterly rise of 2% shows there is still growth in pay-television, particularly in emerging markets,” said William Cooper, the editor of the informitv Multiscreen Index.

Emerging markets are, in fact, the emerging stars of the sector, especially as more mature markets show the effect of saturation and consumer interest in OTT and SVOD services.

Asia Pacific was the big winner, with more than 4.99 million new subs (more than 4 million of them from four operators in India); EMEA added 2.07 million pay-TV subs, with Sky adding 337,000 subscribers in Europe, and Russia’s Tricolor gaining 200,000.

In North, Central and South America the number of subscribers rose by 1.09 million. Sky Mexico gained 230,000, while DirecTV added 214,000 in the United States. The largest loss was reported by AT&T U-verse, which shed 240,000 subscribers, the first subscriber loss it’s seen since it launched in 2006. AT&T execs said the losses came as they focused their attention on the integration of DirecTV and promised a refocusing on U-Verse this year.

Cable operators globally added the most subscribers, some 4 million, followed by satellite with 2.95 million and telco providers up by 1.22 million. In the U.S. especially, where IPTV was the recipient of significant churn losses from cable, those losses have begun to mitigate as subscribers began to return to cable and the – often – higher cable speeds they offer.

U.S. subscriber gains remain unclear. Dish Network said it included new subscribers to its low-cost OTT alternative, Sling TV, in subscriber metrics, and Comcast reportedly included gains from its Xfinity OTT service.

Globally, the 10 services with the greatest gains added a total of 5.11 million television subscribers in the last quarter and 11.05 million over the course of 2015, nearly two-thirds of the total increase.

Just 17 of the 100 services in the Multiscreen Index reported net subscriber losses for the quarter, with a combined loss of 762,000 television customers.

“Twenty-five of the services in the index each gained over 100,000 subscribers in three months,” added informitv analyst Sue Farrell. “Between them they added 7.27 million television customers.”

But, last month, Digital TV Research reported that North American pay-TV subscriber growth had stalled, even as household formation accelerated.

That flatline growth is having an even bigger impact on pay-TV revenues, which DTVR forecast to decline 12% by 2021, to $98.1 billion, $13.54 billion less than 2016.

“At first glance, this does not indicate a massive cord-cutting problem,” said Simon Murray, Principal Analyst at DTVR. “However, the number of non-pay TV homes will climb from 20.7 million to 33.3 million over the same period.”

Stay tuned.

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