The number of pay-television subscribers in the United States and Canada will fall from a peak of 112 million in 2012 to 106 million in 2021, a relatively modest decline. However, as the total number of households will continue to rise, those with pay television will fall from just under one in nine to one in eight. That said, the informitv Multiscreen Index shows that top 10 pay-television service providers in North America actually gained 350,000 subscribers in the last quarter of 2015.
Television subscriber numbers in North America are forecast to fall from 109 million in 2015 to 106 million in 2021, a decline of 2.82 million or 2.59%.
Simon Murray of Digital TV Research writes: “At first glance, this does not indicate a massive cord-cutting problem. However, the number of non-pay TV homes will climb from 20.7 million to 33.3 million over the same period. To put it another way, pay TV penetration will drop from 87.1% in 2012 to 80.3% in 2021.”
Nevertheless, eight out of ten homes will still pay for a satellite, cable or telco television service, which hardly suggests terminal decline.
Digital TV Research predicts that analogue cable television will be the largest loser, shedding 1.84 million homes. Satellite will lose a further 1.36 million, while digital cable and telco television services will pick up less than a couple of hundred thousand respectively. Notably, the forecast is for 4.48 million more free-to-air digital terrestrial homes, taking the total to 23,49 million in 2021.
2015 was notable because subscriber losses were recorded for all of the major platforms: cable, satellite and telco television. Cable has been losing subscribers since 2011. Satellite TV started in 2014, and telco services joined them in 2015.
Much of the telco television loss is attributable to AT&T encouraging its U-Verse subscribers to switch its DIRECTV satellite platform. This was still not enough to stem the loss of satellite television subscribers.
However, the informitv Multiscreen Index shows that while the top 10 pay-television service providers in North America collectively lost 659,000 subscribers in the course of 2015, they actually gained 350,000 in the last quarter.
Cable companies Comcast, Time Warner Cable, Charter, Bell TV and Rogers all gained in the last three months of 2015, adding 340,000 subscribers between them.
It may be too early to tell whether this reflects a significant slowdown in long-term losses or a seasonal effect.
Digital TV Research suggests that a 2.59% decline in subscribers will translate into a 12% reduction in revenue, from $111 billion in 2015 to 98 billion in 2021. This suggests that some providers may have to accept lower average revenue per user to sustain subscriber numbers. However, users may find that they end up paying more for network access, however they watch programming.
So far, concerns of secular decline in pay television in North America appear to be have been overstated. In fact, the sector has held up remarkably well and is slowly responding to the need to offer more flexible access to programming.
New services in Ultra HD, notably live sports, will continue to sustain the pay-television proposition. Not everyone will be persuaded to pay for television, and service providers are not entitled to believe that everyone will want to, but eight out of ten homes is still a relatively high level of penetration for a non-essential service.
The fifth edition of the Digital TV North America Forecasts report is available from Digital TV Research. The Multiscreen Index is published by informitv.