June 22, 2012

Cord Cutting A Nuisance, But Not Critical…Yet

The North American Digital Television (DTV) market is continuing on a growth trajectory despite continued talk of cord cutting, according to data from Strategy Analytics.

Digital subscriptions will increase from 114 million in 2011 to 129 million in 2016, implying a five-year Compound Annual Growth Rate (CAGR) of 2.36 percent. “This is very welcome news for service providers in a highly saturated North American pay-TV market,” the group says.

It continues, “Cord cutting – consumers dropping traditional Pay TV services in favor of online viewing – is a factor that has yet to make an impact on North American pay TV. The mix of DTV subscribers has changed over the past few years, but the total subscriber base continues to increase.”

Data also indicates that, overall, the cable market will see more subscribers leave the fold. Who wins? Digital satellite and IPTV, with IPTV takeup predicted to grow from 8 million subs last year to 20 million in 2016.

Despite these facts, there is hope. Comments Jason Blackwell, director/Service Provider Strategies (SPS) at Strategy Analytics, “Without a competitive level of content, alternative services have yet to offer a compelling alternative to the traditional pay-TV channel lineup.”

Adds SPS analyst Richard Fontes, “Cable has been weakening for several quarters, with most operators losing subscribers. Second screen, TV Everywhere and other new services from cable operators will help slow these losses and keep higher value – meaning higher Average Revenue per User – digital subscribers in place.”