Report: Canadian Pay-TV Market Set to Mature5 Sep, 2012 By: Erik Gruenwedel
Trends mirrors pay-TV market in the United States
The Canadian market for multichannel pay-TV is projected to peak by the end of this year, requiring cable, satellite and telecommunications operators to seek alternative avenues of growth and revenue, according to a new report.
Following years of steady expansion, penetration of pay-TV subscriptions among Canadian television households is set to reach an all-time high of 92% in 2012, and then drop to about 90% by 2016. Subscription penetration will decline slightly due to economic issues and rising competition from over-the-top (OTT) services such as Netflix, according to IHS. Netflix, which launched streaming service in Canada in 2010 has more than 1 million subs in the country.
The trends mirrors the pay-TV market in the United States, which continues to see steady declines in video subscribers, offset by gains in high-speed Internet and telecommunications service. These declines, which peaked three years ago, according to IHS, have seen reduced video sub losses in recent quarters as multichannel video distributors rollout TV Everywhere platforms aimed at retaining subs through ubiquitous access to content on myriad consumer electronics devices in and out of the home.
Indeed, cable operators have been losing share to upstart IPTV players, such as Telus and Bell Canada. Telus and Bell’s Fibe TV are increasing exponential subscriber growth, even at the expense of satellite, according to the report. The trend is similar to the U.S., where Verizon’s FiOS TV and AT&T’s U-verse lure subscribers through promotions and discounts.
“The inevitable maturation of Canada’s pay-TV industry has finally arrived,” said Erik Brannon, analyst for television research at IHS. “The country’s pay-TV operators are feeling the impact of economic woes spurred by the recession that recently ended in the United States. Furthermore, OTT players like Netflix are playing a role in the cessation of pay-TV subscriber growth.”
Interestingly, despite the challenge posed by Netflix, IHS believes that Canadian pay-TV operators are better positioned to fend off the threat from subscription video-on-demand services. This is due to the fact the majority of cable operators impose strict data caps that are easily reached with significant streaming video consumption.
It is this reality that has prompted Netflix CEO Reed Hastings to support regulatory and lobbying efforts in Washington, D.C., aimed at thwarting similar control of consumers’ broadband access in the home.