IPTV take up grows as US pay TV subs plunge

IPTV was the only segment of US pay TV to show subscription growth in the second quarter of this year as overall numbers for the sector plummeted, new figures show.

US IPTV providers including AT&T Uverse, Verizon FiOS and others saw a net addition of 398,000 subs compared with 304,000 in the second quarter of 2012, research from analytics provider IHS revealed.

This figure is contrasted by an overall 352,000 year-on-year fall in pay TV subscriptions. Within this, cable, which IHS categorised cable as an “embattled business”, lost 588,000 subs, down slightly on last year’s 598,000. Satellite losses nearly trebled from 62,000 to 162,000.

The cable sector’s continuing subs losses are in particular made more striking considering the boom in investment in original scripted programming over the last year.

Overall, cable accounts for 55% of the market, satellite 34% and IPTV 11% of the pay TV market.

“Of the three segments in the US pay TV market, the IPTV sector is enjoying growth, especially in urban areas where it is luring subscribers away from satellite,” said Erik Brannon, analyst for U.S. television at IHS.

“In particular, satellite’s lack of a true high-speed internet service or a triple-play bundling option puts it at a disadvantage when competing against IPTV and cable. Cable, meanwhile, has its own problems, including disagreements between operators and content providers over rising programming costs that squeeze customers in the middle.”

The latter reference was in relation to the ongoing fees spat between CBS and Time Warner Cable, which has seen the Under the Dome and CSI network taken off the cable platform.

Brannon said the tiff “demonstrates the kind of difficulties that cable could endure in the future”.

An overall shrinking of pay TV by 146,000 for the first six months of this year represents the first time the industry has begun a year with a net loss. Furthermore, IHS predicts 2013 will be the first full year to see an overall drop in US pay TV subs, falling from 100.89 million to 100.77 million.

This was attributed to “so-called ‘cord-nevers’”, customers that prefer to receive programming from over-the-top services such as Netflix than via a pay TV subscription. The research firm added “a typical pay-TV subscription remains high, staying well out of reach for a number of consumers”.