Doubling up on pay TV
By year-end 2014 between 50 and 100 million homes around the world will have access to, two or more separate pay TV subscriptions – generating about £3 billion in revenues.
Over the course of the coming years, the number of households with multiple subscriptions should continue to rise, as more content owners and aggregators, including platform owners such as cable and satellite providers, make their content portfolios available via subscription video-on-demand. A further stimulus to the market will be the increasing availability of inexpensive HDMI dongles, which connect TV sets to the Web.
Most of the two million households will have just two pay-TV providers, typically one platform-based service and a secondary SVOD service, but about 10% of homes may have three or more providers.
By the end of 2015, 20% of homes in selected markets will have three or more pay-TV subscriptions, as more rights owners make their content available via video-on-demand (VOD), as broadband speeds increase, and as premium programing is increasingly used as a customer retention tool.
In markets where there are multiple platform-based providers of pay-TV, some of the players – be they satellite, cable or IPTV-based – are beginning to offer elements of their program portfolio on a SVOD basis to customers of other platform providers.
A cable TV customer may want both the high broadband speeds available via digital cable and also some of the content only available from a satellite provider; this customer could access the provider’s content via an additional SVOD subscription, rather than purchasing a more expensive platform-based subscription.
It might seem extravagant for a household to double up on pay-television providers. However it reflects a longer-term trend to add to existing packages: rather than sourcing additional packages from other platform providers, thanks to high-speed broadband services customers are now able to source from other content services, often at a price (about £5-£10 per month in the UK) equivalent to adding a minor bundle. So while households may have two providers of video content, the second subscription is at a far lower cost.
Another medium-term development which lessens the financial impact of a second subscription is that households adding SVOD while maintaining existing pay-TV are substituting spend that would have gone on DVD rental and purchase. Indeed in in the UK, declines in spend on DVD box sets of TV programmes are similar to the emerging, rising spend on SVOD.