Decline in North American pay-TV subs

Published March 30th, 2017

According to a new study from Digital TV Research, the number of pay-TV subs in North America is predicted to fall by 10 million by 2022. Digital TV Research says the 9% decline to 102 million subscriptions does not indicate a massive cord-cutting problem.

However, the number of non-pay homes will climb from 20.69 million to 41.56 million over the same period [the number of total households will increase by 11 million. This includes non-TV households]. To put it another way, pay TV penetration will drop from the peak of 87.4% in 2013 to 75.2% by 2022.

The number of pay-TV subscribers declined by 2 million in both 2015 and in 2016. However, the rate of decline will slow from now on, although the 2022 total will be 5 million lower than the end-2016 total, according to the North America Pay TV Forecasts report.

Simon Murray, Principal Analyst at Digital TV Research, explained: “Where are the lost subscribers in the decade to 2022 going? Some analog cable subscribers will give up paying for TV services rather than convert to an often more expensive digital platform.” He continued: “Cord-cutting is also a factor. It has been somewhat exacerbated by the traditional pay TV operators starting their own OTT platforms: satellite TV platform Dish provides Sling TV and DirecTV Now has recently started. Other distractions include Hulu, HBO Now and, of course, Netflix and Amazon Prime Video.”

Cable has been losing subscribers since 2011. This is partly due to the fact that not all of the 18 million analog cable subscribers at end-2010 will convert to digital cable TV platforms – or any digital pay TV platform for that matter.

The free-to-air DTT household total will climb by 10 million between 2016 and 2022 to 31 million – presumably many of these sets will gather dust as these homes will have limited channel choice.

The digital cable TV total will remain flat at about 57 million subs from 2015. Satellite TV will also stay flat at about 36 million from 2015. However, IPTV will lose subscribers. Much of the IPTV loss is attributable to AT&T encouraging its U-Verse subscribers to its DirecTV satellite platform. In Canada, Bell is doing the opposite: encouraging its satellite TV subs to convert to its IPTV platform.

Pay TV revenues [subscriptions and PPV] in North America peaked in 2015 at $108.58 billion. Revenues will fall by 12.7% – or by $13.76 billion – to $94.82 billion in 2022. Cable revenues will decline by $12.13 billion – $2.19 billion less from analog cable and $9.94 billion lower for digital cable. Satellite TV will grow by $1.93 billion, but IPTV will fall by $3.55 billion – or by a massive 32.5%.


Source: Digital TV Research 

Internet advertising expenditure to exceed US $200bn this year

Global internet advertising expenditure will grow 13% to reach US$205bn in 2017, according to Zenith’s new Advertising Expenditure Forecasts.This will be the first year in which more money will be spent on internet advertising than advertising on traditional television (which will total US$192bn).
  The sheer scale of internet advertising means its growth rate is slowing. Internet ad spend grew 17% in 2016, down from 20% in 2015, and the report expects growth to slow to 13% in 2017, 12% in 2018 and 10% by 2019 (though it will continue to add US$23bn-US$24bn a year). In this environment, it is vital that platforms and publishers address advertisers’ valid concerns about viewability and brand safety to secure sustainable growth. As the market matures, advertisers need to know for certain that their ads are being actively viewed by real people in appropriate environments. “Internet advertising has contributed all of the growth in global ad spend since the beginning of the decade, and has stimulated much of the innovation we’ve seen in the market,” said Vittorio Bonori, Global Brand President. “Innovation is proceeding as fast as ever, and we believe that this is what will continue to drive brand growth for advertisers.” The global ad market has grown at a steady pace of 4%-5% a year since the beginning of the decade, and Zenith expects it to continue to do so through to 2019. The forecast for 2017 is for 4.4% growth (unchanged since the last forecasts in December), down slightly from 4.6% growth in 2016. There also should be another 4.4% growth in 2018, followed by 4.2% in 2019. These rates are slightly below the growth rates that the IMF forecasts for nominal GDP.