North America to continue to add pay TV subs

Despite all of the talk about cord-cutting, a new report from Digital TV Research states that the number of pay TV subscribers in North America will continue to increase – albeit at a slow rate. However, the Digital TV North America report states that pay TV penetration will remain flat.

Simon Murray, report author, said: “Most of the pay TV subscriber losses over the last few years have been analog cable subs. Nearly 20 million analog cable subscribers were shed between 2008 and 2012. Most of the remaining analog cable subscribers are either reluctant to pay more for digital packages or they are just not that interested in TV. These subscribers will only make the decision to convert to digital when there are no other options.”

North America share of TV households by platform (000)

                        2008    2012    2013    2018
                      ------  ------  ------  ------
Analog Cable          27,431   7,825   3,760       -
Digital Cable         43,037  56,520  60,142  63,865
IPTV                   3,401  10,619  12,123   7,335
DTH                   33,948  37,019  37,398  38,970
Digital Terrestrial    8,685  17,474  17,342  17,859
Analog Terrestrial     8,189       -       -       -

Source: Digital TV Research

Pay TV penetration has reached saturation point in Canada and the US, so pay TV operators will continue to fight between themselves for new subscribers. Despite flat pay TV penetration, the number of pay TV subscribers will climb by 7.5 million between 2012 and 2018 to 119.5 million. Subscriber numbers will increase by 1.5 million in 2013 alone.

North America pay TV revenues (US$ million)

                    2008    2012    2013    2018
                  ------  ------  ------  ------
DTH               30,945  38,795  38,935  39,902
IPTV               1,200   4,793   5,540   7,245
Digital cable TV  31,244  40,490  41,848  36,588
Analog cable TV   14,534   4,987   2,574       0

Source: Digital TV Research

Murray continued: “However, pay TV revenues [subscriptions and on-demand] peaked in North America in 2012. We forecast that they will fall by $5.3 billion to $83.7 billion in 2018. TV ARPU is being forced down as cable operators and telcos convert their subscribers to dual-play or triple-play bundles, though blended [overall] ARPU is rising. But it won’t end there. As the analog cable networks switch off, operators across all of the digital platforms will try to outdo each other on promotions, with pricing becoming a more and more important tool. Satellite TV [DTH/DBS] will overtake cable to become the largest pay TV platform earner in 2017.”