ANALYSIS What’s Next in the Volatile Pay-TV Services Market?

Author: Brett Sappington / Source: E-Commerce Times

There has been an erosion in penetration of pay-TV subscriptions in the United States, traditionally one of the world’s most lucrative markets for pay TV. They have fallen from a high of 86 percent in 2014 to 83 percent in early 2017, based on Parks Associates recent consumer research.

Despite signs in late 2015 and early 2016 that the U.S. cable TV industry finally had reversed years of subscriber losses, the numbers declined again for most cable operators late that same year.

Over-the-top (OTT) video services often are viewed as the primary driver for the declining pay-TV subscriber trend, but the availability of alternative paid video options is only one of the factors driving the retreat. Many other factors also have been contributing to the decline.

Rising Prices vs. Perception of Value

Prices for pay-TV subscription increases have been driven in part by increased carriage fees.

In a recent survey, 43 percent of respondents who canceled their pay-TV service said that the primary reason for cancellation was that it was not worth the monthly cost.

Cord-Nevers on the Rise

Until recently, the expectation has been that many young people would adopt pay TV as a matter of course as they became older, started families, and acquired more disposable income.

However, the percentage of households that never have opted for pay-TV service is sizable in all under-45 age groups, and it has increased each year as more consumers have opted to stay away from traditional pay TV.

Overall, 5 percent of U.S. broadband households never have subscribed to a pay-TV service.

Cord-Cutter, Cord-Shaver Ranks Swelling

Cord-cutters are subscribers who have disconnected pay-TV…

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