OTT services battle pay-TV in Canadian video market

Similar to the United States, Canada’s pay-TV market is forecast to reach near-mainstream adoption this year, forcing cable, satellite and other services to pursue other means of generating revenue, according to a new report by IHS iSuppli.

The small recurring payments required for a pay-TV subscription service are helping fuel the industry to reach a 92 percent penetration rate across the country this year, representing a new all-time high, IHS iSuppli reported. The number of subscriptions is estimated to decline slightly over the next several years, however, as the economy continues to impact consumer spending and as competition in the over-the-top (OTT) services industry heats up.

Still, these disruptions won’t have any significant impact on subscription numbers, as the research firm predicts pay-TV subscriptions to be present in nearly 90 percent of Canadian households in 2016.

OTT vs. pay-TV subscription services
The maturation of the Canadian pay-TV market comes three years after a similar instance in the United States. This delay was spurred from economic effects, which are just now beginning to impact the video subscription industry, IHS iSuppli reported.

Cable TV offerings currently make up the majority of Canada’s pay-TV market, but there has been a slow decline in video subscriptions since 2011. This is largely because of the proliferation of OTT services like Netflix throughout the country, IHS iSuppli noted.

Despite the growing presence of Netflix and other OTT services, IHS analysts believe Canada’s pay-TV market is in a decent position to fend off the threat – at least for the time being. This is primarily because pay-TV offerings are able to handle more data traffic than OTT programs.

A separate report by the Associated Press noted that Netflix, in particular, experienced a challenging second quarter in 2012, dropping 91 percent because of a decline in subscriptions. While the company still generated significant recurring revenue, the rest of the year is somewhat unpredictable as other video services gain momentum in Netflix’s wake.

The video industry is one of the most competitive in the world, largely because of the wide variety of offerings and business models. Subscription strategies are among the most popular, as more organizations deploy subscription management solutions to provide decision-makers with more visibility into customer activity. By using these platforms, video service providers can make changes more efficiently to meet evolving client demands.