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IHS: Canadian Pay TV Subs Continue to Decline

30 Aug, 2013 By: Erik Gruenwedel

Third consecutive quarterly decline mirrors drop-offs of video subscribers in the United States

Canadian pay-TV subscriptions fell by 10,810 in the second quarter of the year (ended June 30), according to a new data from IHS.

It was the third straight quarter of losses for the Canadian pay-TV space, even though the decline during Q2 was less than during the prior two quarters. The market lost 27,840 customers in the first quarter, and 11,950 in the fourth quarter of 2012. The last time Canadian pay-TV posted gains occurred in the third quarter of 2012.

“For the pay-TV industry in Canada, employment, income and housing starts are the most important factors,” said Erik Brannon, analyst for North American television at HIS, in a statement. “Although there are positive signs in the economy, pay-TV operators in Canada have their work cut out for them to maintain positive video subscriber growth.”

Specifically, IHS said multichannel video program distributors need to minimize the impact of so-called cord-nevers — those who opt not to ever subscribe to pay-TV, choosing instead to get their television content through other means like the computer or tablet, or subscription video-on-demandproviders such as Netflix.

Indeed, MPVDs saw 97,360 net new additions in high-speed Internet connections, but the gain failed to offset the larger decline in video subs.

In the cable segment, Shaw Cable sold its Mountain Cable systems serving 40,000 subscribers to rival Rogers Communications. As a result, the transaction boosted subscriber gains for Rogers while widening losses for Shaw. Two other cable players, Videotron and Cogeco, also posted declines in their subscriber rolls for the period.

Overall, it was the seventh straight quarter of negative growth for cable in the country.

Brannon said significant a-la-carte offerings by cable operators, coupled with the loosening of bandwidth caps, may provide an impetus for cable to reverse the current negative trends.

Cable lost some 78,900 customers in the second quarter — less than the 86,400 that took place in the first quarter, but widening from the decline of 67,600 during the same time a year ago.

Satellite, like cable, also saw 29,300 subscribers leave, more than the 24,600 lost in the second quarter last year. The majority of losses unfolded at Bell Satellite TV, with competitor Shaw Direct doing a better job at retention given a smaller portion of subscriber decrease during the period.

Despite satellite’s continuing difficulties, it remains the dominant form of pay-TV access in the rural communities of Canada, where IPTV encroachment is limited.

Bell and Telus continue to make up the bulk of IPTV additions, and will remain the driving force behind Canadian pay-TV even though the sector’s singularly impressive growth won’t be large enough to compensate for the blended losses incurred by the country’s cable and satellite sectors.

Even so, IHS said the overall Canadian pay-TV business is fundamentally sound, and losses in video subscribers through the years will be nominal. By 2017, total pay-TV subscribers will stand at a projected 11.7 million — just slightly down from the current 11.8 million figure.


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