The impact of over-the-top television services (or IPTV) continues to impact subscriptions to traditional multichannel television services, like cable and direct-to-home (DTH) satellite, according to a global multichannel market study released by Kagan.
The market research firm’s recent global multichannel market report showed that IPTV services surpassed DTH-satellite distribution to become the second largest multichannel platform in the world last year, with cable continuing to hold onto the top spot. The report estimated IPTV accounted for 23.4% of the total market of 1.07 billion households.
Internet Protocol television (IPTV) refers to the delivery of steamed television and video content over Internet Protocol networks. This offers the ability to stream source media continuously, like teleco TV systems and live OTT streaming services.
IPTV subscriber populations are largely concentrated in Europe and Asia where accelerated rollouts of next-generation broadband networks have been driving video service adoption.
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The result overall was a 3.1% boost in total global multichannel subscribers. However, the report also predicted that largely due to high saturation, multichannel growth will decelerate in developed markets including North America.
The study shows worldwide multichannel subscriber additions growing at a rate of 2.4% compound annual growth rate (CAGR) over the next five years to reach a total of 1.21 billion, and accounting for 61.2% of households, up from 60% in 2018.
IPTV, specifically, is expected to account for a 7% CAGR in subscribers over the five-year period, while cable (digital terrestrial television), the multichannel pay TV leader, will see an 8.5% CAGR in the same span, according to Kagan.
In North America, the effects of cord-cutting are expected to have the biggest impact on revenue and penetration, and here in the United States, this is expected to be a continuing trend into the foreseeable future, the report found.
Recently released financial reports from the two primary DTH satellite TV providers, which also have substantial live OTT streaming services, seem to corroborate the Kagan findings.
Recent fourth-quarter financial reports from U.S. DTH satellite (and live OTT) service DISH listed total revenue totaling $3.31 billion for the quarter ending December 31st 2018, compared to $3.48 billion for the same period last year. Net income totaled $337 million for the period in 2018, compared to $1.39 billion a year ago.
The company closed the fourth quarter with a total of 12.32 million pay-TV subscribers, including 9.9 million DISH TV (DTH) subscribers and 2.42 million (OTT) Sling TV subscribers. Net Pay-TV subscribers decreased by approximately 334,000 in the period, compared to net additions of 39,000 in the year-ago quarter.
For the year, DISH said it lost a total of 1.125 million satellite TV customers in 2018, up from 995,000 in 2017. Gains at Sling TV declined for the year to 205,000 from an increase of 711,000 in 2017.
At least some of those losses were attributed to DISH’s failure to renegotiate carriage agreements with popular Spanish-language channel provider Univision in June and major premium cable movie network HBO in November.
Meanwhile, DTH- and live-OTT-rival AT&T DirecTV, saw a similar pattern.
The company reported a loss of 403,000 DirecTV satellite TV subscribers during the fourth quarter of 2018 and a loss of 267,000 subscribers to its cheaper live OTT streaming service, DirecTV Now. The company attributed the drop in DirecTV Now OTT service subscribers to an end of aggressive promotions which chased away mostly lower-end customers.
The DirecTV DTH service was left with about 19.2 million subscribers, while the DirecTV Now skinny bundle service lost about 14% of its subscriber base in the period for a total of 1.6 million subs, down from 1.86 million at the end of the third quarter. On the positive side, AT&T reported a gain of about 12,000 subscribers to its Uverse IPTV-deliverd telco TV service.
Meanwhile, the year-old YouTube TV live OTT TV streaming service, has been expanding its coverage around the nation to about 195 markets in the U.S., or 98% of U.S. household. The company was believed to have had more than 800,000 subscribers in July, attracted to its strong channel selection and popular original price offering.
However, YouTube TV, like other live OTT streaming services Hulu + Live TV, DirecTV Now, Sling TV, Playstation Vue and others announced price hikes during 2018.
By Greg Tarr
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