Pay-TV faces challenges despite cable churn improvements

DetailsMichelle Clancy | 27 May 2015

Cable losses narrowed in the first quarter, but there are plenty of challenges that could prevent big growth for pay-TV in the US.

According to IHS Technology, cable lost only 132,900 subscribers in the first quarter of 2015.

"Cable's strong performance in the first quarter signals that the maturation of the US pay-TV business is nearly complete," said Erik Brannon, senior analyst, television media for IHS. "Significant gains for telco IPTV players are coming to an end, as cable companies have lately done a better job reducing churn. Growth in high speed data and bundling are significant components of the cable industry's growth strategy; however, better execution and technological developments are also playing significant roles in reducing subscriber losses."

But, even as the cable industry finds ways to mitigate losses, the number of US TV households without a pay-TV subscription is still expected to grow, from 18.6 million in 2008 to 26.7 million in 2019. According to the latest information in the IHS State of the US TV Operator Market report, nominal declines in cord-cutting are expected to be the norm, with pay TV households falling slightly from 101.0 million in 2014 to 100.3 million in 2019.

"This decline does not signal the death of the pay-TV business, as gains in average revenue per user are likely keep video revenue on a slow-growth trajectory," Brannon said. "Even so, the number of pay-TV households in the United States is forecast to remain fairly flat, as pay-TV over-the-top (OTT) television solutions become more attractive."