Pay TV, which refers to subscription-based television services, is part of the dynamic and profitable TV industry. Despite the rise of cord-cutting and increasing consumption of streaming services, global television subscription revenue is forecast to continuously grow in the next few years, with the global pay TV penetration rate projected to reach 50 percent by 2017. Concerning regional markets, pay TV revenue is forecast to grow in emerging markets such as India, Brazil, China and Japan. However, TV pay revenue from mature markets such as the Netherlands, United Kingdom, France, Canada and the United States is forecast to drop in the coming years.
The United States shows the biggest estimated decline for the coming years, as revenue of pay TV in the U.S. is forecast drop in nearly eight million U.S. dollars between 2013 and 2020. Majority of the revenue generated by providers of cable and TV subscriptions in the U.S. comes from advertising and program revenue (licensing of rights to broadcast specialty programs). Air time – which includes advertising and program content – also contributes with about 36 percent of the total revenue. In line with the overall declining trend, the number of pay TV households in the U.S. is expected to slightly drop in the coming years, going from 101.3 million household in 2014 to an estimate of 96.4 million by 2019. The number of non-pay TV households in the U.S., on the other hand, is forecast to double in the same time period.
Much of this decline can be attributed to cord-cutting, that is, a pattern of viewers cancelling their pay TV subscriptions. Many household justify the cancelation of a pay TV subscription on money issues; nearly 70 percent of Americans cut the cord because they believe cable TV is too expensive, while 67 percent see cord-cutting as an alternative to save money, according to an Ipsos survey. About 40 percent of the survey respondents also stated that online paid services are cheaper than cable; therefore, they decide to cancel their subscriptions. Streaming services rise as a more affordable alternative, considering about half of North American consumers paid between six and 11 U.S. dollars monthly for their subscription to services such Netflix or Hulu. These services also have a direct impact in cord-cutting, as households with streaming services are more likely to have no cable or satellite TV than the households without these subscriptions.
Comcast Corporation is the leading pay TV provider in the U.S. in regards to subscriptions, and holds about 22.4 percent of the pay TV market share in the U.S. DirecTV is the second largest pay TV provider, with an estimate of 20.3 percent of the market share, followed by Dish Network. The market share of pay TV providers is forecast to remain similar in the coming years, with variation of one to two percent between 2014 and 2021.
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