Globally, pay TV subscription revenue is forecast to inch upward from $215 billion in 2017 to $221 billion in 20181. However, as broadband quality has increased, and connected devices have proliferated, including smart TVs and smartphones, new OTT competition and direct-to-consumer content is reaching more audiences. In addition, telcos have an increased presence in pay TV market, leveraging their competing network infrastructure and existing relationships for bundle offers.
Globally, pay TV subscription revenue is forecast to inch upward from $215 billion in 2017 to $221 billion in 20181. However, as broadband quality has increased, and connected devices have proliferated, including smart TVs and smartphones, new OTT competition and direct-to-consumer content is reaching more audiences. In addition, telcos have an increased presence in the pay TV market, leveraging their competing network infrastructure and existing relationships for bundle offers.
Competition in the pay TV industry has increased between cable and satellite companies, telcos and OTT service providers. The largest pay TV providers in the U.S. lost 405,000 net video subscribers in Q3 2017 compared to a loss of 250,000 subscribers in Q3 2016. Innovation is key, with some companies able to stave off subscriber losses by converting them to cord-cutting services. For instance, AT&T reported a loss of 390,000 total subscribers with 300,000 converting to its satellite and U-verse services to DirecTV Now, a cheaper option for streaming television over the internet. Meanwhile, Comcast reported a loss of 125,000 total video customers during Q3 2017, up from 34,000 in losses during the Q2 period. Despite this decline, Comcast was able to compensate with a 5.1% YoY increase in cable communications revenue to $13.2 billion driven by high-speed Internet, video and business services. In fact, business services rose 12.6% over Q3 2016.
The squeeze from SVOD original content and $10 or under subscription fees has forced pay TV providers to embrace multi-screen TV options. Sky in the UK was one of the first to prevent cannibalization of their main services by offering Now TV, which targeted customers without a pay TV service with limited live TV streaming. Over the last five years, Sky saw only 2% of Sky TV customers joining Now TV, proving the investment successful2.
As the ultimate live experience, sports is a driving force behind a subscriber’s choice between cable TV and OTT. Every time a household cancels cable service, ESPN loses about $8 a month. As streaming video has continued to rise, ESPN has seen a decline from 100 million households in 2011 to 87 million households in 2017. Which is why it’s not surprising the Walt Disney Co. is offering an over-the-top video streaming edition for ESPN fans at $4.99 per month for the app – although notably it will not include North American football.
Content protection technologies and services enable a trusted environment for content companies to distribute their content. While content protection for digital media is a mature technology, protecting the billions of pieces of content distributed to millions of devices daily is a constant challenge. The Intertrust ExpressPlay™ cloud DRM system provides complete, end-to-end content protection and is the only multi-DRM technology available across all popular platforms and formats.
The ExpressPlay suite also offers a disruptive card-less Conditional Access System (CAS) that uses open-standard Marlin DRM to enable broadcasters and network operators to deliver content.
Intertrust How to Revive the Pay TV Market White Paper 2018