Pay-TV “continues to dominate” in US

Pay-TV services continue to dominate the US home entertainment industry, with 86% of homes paying a regular fee to receive linear TV channel broadcasts, and revenues rising 4.3% in 2011 to reach US$94bn, according to a new industry report from Futuresource Consulting.

Breaking down the nation’s home entertainment industry into video-on-demand, electronic sell-through, pay-TV, and sell-through and rental of packaged media such as DVDs, pay-TV is estimated to account for a whopping 40% of total revenues.

“Although the Netflix OTT (over-the-top) TV service has been a major disruptive force, driven by high profile tie-ins with connected CE device manufacturers and streaming deals with studios, its direct impact on the pay TV industry has been minimal,” said Carl Hibbert, Head of Broadcast, Content & Services at Futuresource Consulting.

“The spectre of cord cutting predicted by many in the industry has not revealed itself in any great way and Futuresource forecasts indicate that it will not do so in the foreseeable future either, with less than 5% of subscribers exiting in the next two to three years.”

Hibbert adds that whilst it is true that cable operators have seen some decline in subscriber figures, the majority have come from lower-end packages, which are more associated with small average revenues per user (ARPUs) and higher tendencies to churn out.

“Many of those subscribers leaving cable have actually moved across to IPTV and satellite as opposed to leaving pay TV altogether. The most significant impact from online video services has been on the packaged media segment, which fell by US$2.3bn in 2011.”

Responding to the internet threat, pay TV is now “vigorously exploiting” multiplatform and second-screen opportunities with ‘TV everywhere’ services, while tentatively exploring OTT distribution into connected CE devices, says the report.

Over-the-top (OTT) video will however continue to grow, despite rights issues and higher prices imposed by studios and premium aggregators.

Growth in both paid-for and ad-funded OTT segments is expected to culminate in the US online video market generating more than US$12bn by 2016.

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