Advanced Television

Pay-TV dominates US home entertainment market

November 20, 2012

Pay-TV continues to dominate the US home entertainment industry, with 86 per cent of homes paying a regular fee to receive linear TV channel broadcasts, and revenues rising 4.3 per cent in 2011 to reach $94 billion according to a new industry report from research and knowledge-based consulting company Futuresource Consulting.

“This figure does include basic subscription TV households that are paying relatively small sums to operators, but premium packages which provide access to blockbuster movies and TV shows feature heavily in the numbers,” says Carl Hibbert, Head of Broadcast, Content & Services at Futuresource Consulting. “In addition, of the $32 billion spent in the USA on premium home entertainment – which includes VoD, electronic sell-through, pay TV and sell through and rental of packaged media – pay TV accounts for 40 per cent.

“Although the Netflix OTT (over-the-top) TV service has been a major disruptive force, driven by high profile tie-ins with connected CE device manufacturers and streaming deals with studios, its direct impact on the pay-TV industry has been minimal. The spectre of cord cutting predicted by many in the industry has not revealed itself in any great way and Futuresource forecasts indicate that it will not do so in the foreseeable future either, with less than five per cent of subscribers exiting in the next two to three years.”

Hibbert noted that cable operators had seen some decline in subscriber figures, though the majority had come from the low-end, which was associated with low ARPUs and higher tendencies to churn out. “Many of those subscribers leaving cable have actually moved across to IPTV and satellite as opposed to leaving pay-TV altogether. The most significant impact from online video services has been on the packaged media segment, which fell by $2.3 billion in 2011,” he advised.

Responding to the Internet threat, pay-TV is now vigorously exploiting multiplatform and second screen opportunities with ‘TV everywhere’ services, while tentatively exploring OTT distribution into connected CE devices, says Futuresource. Consumers will continue to buy into pay-TV subscriptions for the range of programming, the availability of premium content and the additional services. Pay-TV can compete with OTT and maintain its position, though OTT will also continue to expand despite rights issues and higher prices imposed by studios and premium aggregators. Growth in both paid-for and ad-funded OTT segments will culminate in the US online video market generating more than $12 billion by 2016.

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