Canada’s pay-TV market to peak this year

Canada’s pay-TV market will reach saturation point this year, compelling the country’s cable, satellite and IPTV operators to seek new growth opportunities, according to a new report from information and analytics provider IHS.

After years of steady expansion, penetration of pay-TV subscriptions among Canadian television households is set to reach an all-time high of 92 percent in 2012, but will then decline just slightly during the following years, due to economic issues and rising competition from over-the-top (OTT) services.

“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.”

The Canadian peak in pay-TV subscriptions comes three years after the same event occurred in the US, according to IHS, which ascribes the time lag to delayed economic effects and severe data caps implemented by cable operators in the country.

With the era of significant growth for the basic video segment coming to an end, Canadian cable operators are thought to be seeking ancillary businesses to bolster sagging subscriptions, with new growth opportunities believed to lie in services like Wi-Fi and cellular.

IPTV players are described as being in the best position in Canada’s pay-TV market, with several weapons in their arsenal, including capabilities to offer aggressive promotions, roll out fibre-to-the-home (FTTH) connections and expand the penetration of homes passed.

Despite the challenge posed by Netflix, IHS believes that Canadian pay-TV operators are better-positioned to fend off the threat from such OTT services, as the majority of cable operators provide severe data caps that are easily reached with significant OTT video consumption.

By 2016, IHS expects Canadian pay-TV subscriptions to decline only slightly to 89.9 percent of TV households.

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