U.S. Pay-TV Revenue to Drop $27B by 2023

Domestic pay-TV revenue is projected to decline $26 billion (26%) to $75 billion from a peak of $101.7 billion in 2015, according to new data from Digital TV Research.

Cable TV revenue will fall to $36.7 billion from a peak of $54.1 billion in 2010 at $54.1 billion. Cable will lose nearly 12 million subscribers, although most of the losses have already taken place.

“Satellite TV and [IPTV/telecom] are also losing subs and revenue,” Simon Murray, principal analyst at Digital TV Research, said in a statement. “Much of this is due to the operators shifting their subscribers to online platforms. However, growth from virtual MVPDs is not expected to make up completely for the subscriber and revenue shortfalls from traditional pay TV.”

The report suggests telecom sub losses are mainly due to AT&T encouraging U-Verse subs to convert to DirecTV. This is the reverse of what has happened in most other countries. Telecom revenue spiked in 2015 at $9.6 billion and will fall to $4.7 billion in 2023. The number of telecom subs topped 12 million in 2014, declining to 6.2 million in 2023.

Satellite TV revenue will decline (16%) from $39.7 billion in 2017 to $33.6 billion in 2023. Satellite TV subs will drop by 4 million from the end of 2017 to 2023 – down 3 million in 2017 alone. Dish is pushing its Sling TV platform, with DirecTV Now also making an impact.

The number of domestic traditional pay TV subs will fall from 100.3 million in 2012 to 80.3 million in 2023. Pay TV penetration will fall from 87.6% of TV households in apex year 2013 to 66.7% in 2023.

Although Canada is losing pay TV subs, its problems are not as severe as the United States. Pay TV penetration reached a highpoint in 2013 at 85.1%. The level will fall to 74.8% by 2023. However, the number of pay TV subs will be 11.2 million by 2023 – about the same as 2017. Pay TV revenue will fall from a peak of $6.8 billion in 2015 to $6 billion by 2023.

Pay-TV Operators Lost Nearly 1.5 Million Subs in 2017

Domestic pay-TV representing about 95% of the market lost about 1.49 million net video subscribers in 2017, compared to a pro forma loss of about 760,000 subscribers in 2016, according to new data from Leichtman Research Group. Traditional pay-TV services (not including Internet-delivered) lost about 3 million subs in 2017, compared to a loss of about 1.9 million subs in 2016.

The pay-TV providers account for 92.2 million subscribers — with the top six cable companies having about 48.1 million video subs, satellite TV services 31.5 million subscribers, telecoms 9.2 million subs, and online TV platforms with 3.4 million subscribers.

Leichtman said the top six cable companies lost about 660,000 video subs compared to a loss of 275,000 subs in 2016.

In 2017, the top cable providers cumulatively lost 1.4% of video subscribers — compared to a loss of 0.6% in 2016. Satellite TV services lost about 1.55 million subs in 2017 — compared to a loss of about 40,000 subs in 2016. DirecTV lost 554,000 subs compared to a gain of 1.22 million subs in 2016.

In 2017, DBS services cumulatively lost 4.7% of video subscribers — compared to a loss 0.1% in 2016

The top telephone providers lost about 885,000 video subscribers in 2017 — compared to a loss of about 1.59 million subs. AT&T U-verse lost 624,000 subs in 2017, compared to a loss of 1.35 million subs.

In 2017, the top Telcos cumulatively lost 8.7% of video subs, compared to a loss of 13.6% in 2016. The top (publicly reporting) Internet-delivered services added about 1.6 million subs in 2017, compared to 1.14 million net adds in 2016.

Subscribers to the top Internet-delivered services increased by 90% in 2017.

“Satellite TV services had more combined net losses in 2017 than in any previous year, yet these losses were offset by gains from their Internet-delivered flanker brands, such as DirecTV Now and Sling TV,” analyst Bruce Leichtman said in a statement. “Overall, the top pay-TV services lost 1.6% of subscribers in 2017 compared to a loss of 0.8% in 2016.”

 

Pay-TV Providers Subscribers at
End of 4Q 2017
Net Adds in
2017
Cable Companies
Comcast 22,357,000 (151,000)
Charter 16,997,000 (239,000)
Altice 3,405,500 (129,000)
Mediacom 821,000 (14,000)
Cable ONE* 283,001 (37,245)
Other major private company** 4,200,000 (90,000)
Total Top Cable 48,063,501 (660,245)
Satellite Services (DBS)
DIRECTV 20,458,000 (554,000)
DISH TV^ 11,030,000 (995,000)
Total DBS 31,488,000 (1,549,000)
Phone Companies
Verizon FiOS 4,619,000 (75,000)
AT&T U-verse 3,657,000 (624,000)
Frontier 961,000 (184,000)
Total Top Phone 9,237,000 (883,000)
Internet-Delivered
Sling TV^^ 2,212,000 711,000
DIRECTV NOW 1,155,000 888,000
Total Top Internet-Delivered 3,367,000 1,599,000
Total Top Providers 92,155,501 (1,493,245)

Domestic SVOD Market to Reach 125 Million Subs in 2018

The combined pay-TV and over-the-top video markets remain growing, with total revenue projected to top $140 billion in 2018, according to new data from Futuresource Consulting. This, despite a continuously evolving and challenging media and consumer landscape.

London-based Futuresource said the United States remains a global leader in digital adoption, while maintaining a balanced market overall – driven by expanding formats, platforms, services and business models.

The firm cited the rebranding of Movies Anywhere, increased availability of 4K UHD content and renewed discussion surrounding digital movie release dates, as “intriguing” efforts to sustain the transactional entertainment market.

In addition, Futuresource said the renewed push on direct-to consumer-services, media industry acquisition and government regulation (e.g. net neutrality), will ensure that the media landscape continues to evolve.

Indeed, the report suggests pay-TV, largely through increased ARPU (average-revenue-per-user) rather than subscriber growth, is contributing the most to overall revenue growth – in addition to SVOD continues to provide an increasingly significant contribution.

Household pay-TV penetration is projected to decline to 97.6 million this year from 98.7 million last year, according to Statista.com.

“The SVOD culture continues to strengthen, Futuresource estimates that there are now 125 million SVOD subscriptions in the USA,” David Sidebottom, principal analyst at Futuresource Consulting, said in a statement.

Although, SVOD consumer spend is just 10% of the total pay-TV market, further growth is expected in 2018, driven by continued growth in established services and the quick expansion of a plethora of less established services, with platforms such as Amazon Channels helping drive this momentum.

While challenged, the pay-TV market generated more than $100 billion in 2017. Cord-cutting remains largely hype, with subscriptions expected to fall 1% in 2018.

Futuresource contends multichannel video production distributors are stemming cord-cutting through proprietary and third-party launches of online TV platforms.

TiVo Says 20% of Daily Life Spent Consuming Video

Television tech company TiVo Jan. 9 revealed that the average global consumer spends almost five hours daily consuming and searching video entertainment – about 20% of daily life.

The results are from a survey of 8,500 pay-TV and over-the-top video subscribers across the U.S., Europe and Latin America.

“Consumers today are acting as their own aggregator, piecing together what they need from a variety of video service and device combinations to suit their individual needs,” Paul Stathacopoulos, VP of strategy, said in a statement.

Indeed, while 90% of households still subscribe to pay-TV – including 50% who have been with their operator at least four years – more than 60% also subscribe to a SVOD service such as Netflix, Amazon Prime Video and Hulu.

The United States ranks No. 1 in average daily viewing hours with 5.1, followed by the Brazil (4.7 hours), United Kingdom (4.2), Columbia (4.1), Mexico (4.1), France (3.7) and Germany (3.3).

Among SVOD services, not surprisingly Netflix dominates – except in Germany where Prime Video controls 69% of the market followed by Netflix and Maxdome at 42% and 12%, respectively.

Notably, despite marketing push toward mobile viewers, the vast majority(77%) of video consumers do so on a traditional television, followed by desktop computers (from 12%), smart phones and tablets (6%).

Roku continues to lead the U.S. streaming media device market (29%), followed by Google Chromecast (21%) and Apple TV (18%). However, Google, Apple and Amazon Fire TV Stick control the global market.

“Success in this new environment will not be about a single content source monopolizing the living room, instead it will be about adapting the business model to deliver value, integrated services and personalization to meet the evolving consumer needs,” said Stathacopoulos.