Subscription TV market continues heating up

TV has been around for a long time and is forecast to stay around in the coming years, despite the proliferation of web-based services that provide online content. A recent report by ABI Research highlighted that consumers around the world will continue subscribing to pay-TV services in the form of cable, satellite and IPTV, as the market for pay-TV is forecast to generate $236 billion in revenue in 2012, up from $223 billion in 2011.

This growth is estimated to increase by another 19 percent during the next five years with the market eventually generating $281 billion in revenue by 2017, ABI Research noted. This will largely be attributed to recurring revenue streams created by long-term loyal customers, although cable will likely lose some of its dominance in the presence of next-generation services.

“Growth in satellite and IPTV services in North America comes at the expense of cable,” said Jake Saunders of ABI Research. “This competitive shift, coupled with a small drop in pay-tv penetration, lead cable-TV revenues to fall about 1 percent in 2012 despite a small increase in [average revenue per user].”

A separate report by Parks Associates highlighted similar findings, noting that cable’s share of the overall pay-tv market in the United States is estimated to drop to 52 percent in 2017, while IPTV rises to 18 percent. Satellite will make up the remaining 30 percent of the industry.

Parks Associates revealed the number of U.S. cable subscriptions will fall to slightly more than 56 million in 2017, down from 60.7 million in 2011. IPTV subscriptions, on the other hand, will grow to 18.6 million in 2017, up from only 8.8 million last year.

“The era of huge subscriber gains in the U.S. pay-TV market is over,” said Jim O’Neill, research analyst at Parks Associates. “Cable TV providers are losing subscribers to IPTV services from AT&T, Verizon and CenturyLink.”

Furthermore, over-the-top (OTT) TV services are also gaining ground, as Netflix recently reported it has more than 30 million subscribers, with more than 25 million located in the United States.

Generally speaking, the market for subscription TV services is growing more competitive with each passing year. If pay-TV vendors want to remain competitive with OTT service providers like Netflix, companies will need to implement innovative subscription billing and management platforms that provide real-time information regarding subscriber activity. By using these tools, executives can make on-the-fly adjustments to keep customers happy and coming back for more.