Canada Pay-TV Market Shows Maturity in Q2, but IPTV’s Star Remains Undimmed
El Segundo, Calif., September 1, 2013, – Subscriptions to pay-TV in Canada fell by 10,810 in the second quarter of the year, with gains in the Internet Protocol television (IPTV) segment failing to offset losses in both cable and satellite, according to a new TV Intelligence report from information and analytics provider IHS.
It was the third straight quarter of losses for the Canadian pay-TV space, even though the decline during the most recent April to June period was less than during the prior two quarters. The market lost 27,840 customers in the first quarter, and also by 11,950 in the fourth quarter of 2012. The last time Canadian pay-TV posted gains occurred in the third quarter of 2012, as shown in the attached figure.
“For the pay-TV industry in Canada, employment, income and housing starts are the most important factors,” said Erik Brannon, analyst for North American television at IHS. “Although there are positive signs in the economy, pay-TV operators in Canada have their work cut out for them to maintain positive video subscriber growth.”
In particular, operators will need to minimize the injurious effect to the market inflicted by the so-called cord-nevers—those who opt not to ever subscribe to pay-TV, choosing instead to get their television content through other means like the computer or tablet, from alternative providers such as Netflix.
Both the cable and satellite segments of Canadian pay-TV shed subscribers in the second quarter, with combined losses during the period amounting to 108,160 subscriptions. Meanwhile, IPTV saw 97,360 net new additions, but the smaller gains compared to the larger decline meant the Canadian pay-TV market overall still came up short.
In the cable segment, Shaw Cable sold its Mountain Cable systems serving 40,000 subscribers to rival Rogers Communications. As a result, the transaction boosted subscriber gains for Rogers while widening losses for Shaw. Two other cable players, Videotron and Cogeco, also posted declines in their subscriber rolls for the period.
Overall, it was the seventh straight quarter of negative growth for cable in the country.
Cable continues to face increasing pressure from IPTV’s expansion, similar to what is going on in the U.S. However, significant a-la-carte offerings by cable operators, coupled with the loosening of bandwidth caps, may provide an impetus for cable to reverse the current negative trends, Brannon noted.
Cable lost some 78,900 customers in the second quarter—less than the 86,400 that took place in the first quarter, but widening from the decline of 67,600 during the same time a year ago.
Satellite, like cable, also saw 29,300 subscribers leave, more than the 24,600 lost in the second quarter last year. The majority of losses unfolded at Bell Satellite TV, with competitor Shaw Direct doing a better job at retention given a smaller portion of subscriber decrease during the period.
Despite satellite’s continuing difficulties as the space racks up a fifth straight down quarter, it remains the dominant form of pay-TV access in the rural communities of Canada, where IPTV encroachment is limited.
In contrast to the ongoing challenges of cable and satellite, the IPTV sector enjoyed its ninth straight quarter of growth. With 97,400 new subscribers, the net gains for the latest quarter became the second-highest so far for Canadian IPTV.
Bell and Telus continue to make up the bulk of IPTV additions, and will remain the driving force behind Canadian pay-TV even though the sector’s singularly impressive growth won’t be large enough to compensate for the blended losses incurred by the country’s cable and satellite sectors.
Even so, the overall Canadian pay-TV business is fundamentally sound, and losses in video subscribers through the years will be nominal. By 2017, total pay-TV subscribers will stand at a projected 11.7 million—just slightly down from the current 11.8 million figure.
