Cable's Pay TV Share Slips Again

Despite a still-growing pay TV market, cable operators are continuing to lose their market share lead as telecom and satellite TV providers keep making gains, according to a new report.

In its latest survey of the global pay TV landscape, Infonetics Research Inc. found that cable operators saw their share of market revenues slip another 1% in the first half of the year, due mainly to continuing video subscriber losses in the key North American market. With US and Canadian MSOs now shedding subscribers at the rate of 1.5% to 2.5% a year, the cable industry's video revenue growth has slowed to a trickle even with price increases and the rollout of advanced new video services.

In contrast, telecom and satellite TV providers saw their respective shares of pay TV market revenue rise again in the first six months of the year, thanks mostly to video subscriber gains and higher average revenue per unit (ARPU) in the critical North American and Western European markets. In the US, for instance, AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), DirecTV Group Inc. (NYSE: DTV), and even Dish Network LLC (Nasdaq: DISH) have all managed to gain subscribers this year while the large MSOs keep hemorrhaging video customers.

Not surprisingly, then, DirecTV maintained its position as the market-share leader in pay TV revenues during the first half of the year. DirecTV earns that position through a combination of its huge customer base and industry-high ARPU.

"Telco IPTV operators AT&T, China Telecom, and Deutsche Telekom continue to enjoy strong growth in new subscribers and ARPU, showing that competitive providers with differentiated services can successfully steal share away from incumbent cable operators," said Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics. "Whether it's an improved user interface, multiscreen video, or even DVR services, there are marked differences that have allowed telcos to grow their subscriber bases at a time when others aren't."

Overall, Infonetics reported, global video-service revenue climbed to $110 billion in the first half of 2013, up 2% from about $108 billion in the second half of 2012. All of translates to annual market revenues of roughly $220 billion.

Infonetics sees global pay TV market revenues continuing to grow at nearly a 5% clip over the next few years. By 2017, the research group expects market revenues to hit $270 billion.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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