Changing the channel: reports point to rise of internet TV providers over traditional models

18 Sep 2013

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Image via Andrey_Popov/Shutterstock

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Reports from media and consumer analysts have noted a significant shift in the television space as consumers move away from the traditional broadcast and pay-TV models towards online streaming and on-demand content.

Pay-TV figures take a dive in the US

The Television Intelligence report from market research firm IHS describes the number of cable and satellite subscribers in the US as plunging.

In an analysis of figures from the second quarter of 2013, IHS finds that, overall, the US pay-TV market lost 352,000 subscribers in this period. The most significant losses came from drop-offs in cable (588,000) and satellite (162,000) subscriber numbers.

Going against the grain, however, is pay-TV from IPTV (internet protocol television) providers. In Q2 2013, this segment of the US market was the only one to see an upward trend, adding 398,000 subscribers between April and June this year.

Among total pay-TV subscribers in the US, that leaves cable with 55pc of the market share, satellite with 34pc and IPTV with a rising share of 11pc.

Cord-nevers

Based on these figures, IHS projects that 2013 will be the first year to record an annual decline in subscribers in the US pay-TV market. The research firm attributes the downturn, in part, to a growing number of ‘cord-nevers’. That is, consumers that will never pick up a pay-TV subscription, opting instead for over-the-top (OTT) services, such as Netflix.

Another report, this time from TDG, predicts Netflix streaming in the US will reach 13bn hours this year, doubling to 26bn hours by 2018.

While ‘The Maturation of Netflix’ report projects that Netflix streaming in the US will grow substantially, TDG also expects subscriptions in the US to level out around 2020 due to increasing competition from Amazon, Google and Hulu in this market. That said, international growth is expected to continue.

The secret to Netflix’s success, it seems, is giving viewers what they are already demanding. It was recently revealed that the company snoops on torrent sites to find out ‘what’s hot’ in terms of content downloads, then secures the rights to stream this content and provides viewers with a legal way to watch.

“Would-be competitors will need to do as Netflix has done: spend the considerable money it takes to acquire quality content, move forward with good strategy, and offer a high-quality consumer search/discovery and viewing experience,” advises Bill Niemeyer, TDG senior analyst.

Time-shifted viewing

While some pay-TV providers in the US seem to be giving up completely and turning their hand to offering home security services instead, others are facing up to the competition by providing ‘TV Everywhere’ solutions that allow users to watch content on a range of devices.

Even smarter solutions are those that provide time-shifted content in this context. This ‘watch when you want’ phenomenon is driving increases in the US, the UK and Germany. In fact, according to IHS research to be presented at The Future of Digital Media Distribution conference on 26 September, on-demand and DVR viewing accounts for one in six of all TV minutes in the US and UK, Broadband TV News reports.

In 2012, people in the US and UK spent more than 40 minutes per day watching time-shifted TV. On-demand OTT subscription services like Lovefilm and Netflix are also seeing growth, accounting for one in seven minutes of online viewing across the big five European markets: the UK, France, Germany, Spain and Italy. Meanwhile, daily linear broadcast viewing is in decline.

Family watching TV image by Andrey_Popov via Shutterstock

Elaine Burke is managing editor of Siliconrepublic.com

editorial@siliconrepublic.com