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Cable's Pay TV Share Slips Again

Alan Breznick
12/26/2013
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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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albreznick
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albreznick,
User Rank: Blogger
12/30/2013 | 6:00:01 PM
Re: Expect the trend to continue
I agree with you, Phil. I think we're approaching a tipping point now with cable prices. If MSOs aren't careful, they could see a real erosion of their video base for years to come.
Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
12/30/2013 | 2:35:44 PM
Expect the trend to continue
With cable continuing to boost prices and continuing to provide poor service, I would expect this trend to continue 

Inflation and wages have been relatively stagnant for several years, but cable keeps going up. With cableless choices increasing, cable companies will need to re-strategize to stem the tide.
MarkC73
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MarkC73,
User Rank: Light Sabre
12/26/2013 | 4:14:25 PM
Re: Trading places
I think those are two different things, for the Cable co's it's about proving they've got the reliability and support for the critical services and SLA's for their retail and wholesale customers.  For the residential market, Cable co's have pretty much tapped out subscribership and have to work on ARPU increases, which can be more difficult than growing into a market, what they do have working in their favor right now is cash flow.

Telco's primary concerns are more capital outlay and content acquisition.

What I do wonder about is how the major players will deal with content.  Will the providers start integrating themselves with the content like Comcast or will we see more a model where content will be available independently and leaving up to consumers and providers to aggregate for themselves, like when Time Warner spun off cable?

Though delivery and mobility are key differentiators, content is king.
DOShea
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DOShea,
User Rank: Blogger
12/26/2013 | 10:09:46 AM
Trading places
How much longer until cable companies become known primarily as business telcos and telcos become known mainly as video providers?
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