Emerging markets to drive global pay-TV penetration past 50% in next two years

DetailsEditor | 19 June 2015

Never mind cord-cutting: the next five years look very healthy for the global pay-TV industry, with half the world's homes to have such a service by 2017 says ABI Research.

The analyst's latest investigation into the pay-TV arena found that the worldwide pay-TV market shot past the 900 million subscriber mark at the end of the first quarter of 2015, representing 48% penetration, on track for over a billion subscribers by 2017.

ABI projects that growth is set to continue steadily over the next five years, mainly boosted by emerging markets. "Worldwide pay-TV market is expected to reach 1.1 billion subscribers, generating US$307.5 billion in service revenue by 2020," said industry analyst Khin Sandi Lynn. "The Asia-Pacific pay-TV market is likely to grow faster than most other regions in the years to come. ABI Research forecasts that pay-TV market in Asia-Pacific is expected to grow at a CAGR of 5%, generating US$79.4 billion in 2020."

Yet even though cord-cutting and the uptake of over-the-top (OTT) services do not seem to be having any great effect on subscriber numbers, ABI warned that they will dent revenues. Indeed it noted that competition from OTT players will see pay-TV ARPU continue to decline in many markets. As a response, ABI sees increased numbers of operators adding their own OTT, multiscreen on-demand services in order to compete with OTT service providers. These services have contributed additional revenue to pay-TV operators as well as maintaining customer loyalty.

Looking at regional differences, ABI sees competition as being higher in more mature markets such as North America and Western Europe where pay-TV penetration is as much as 60% to 80% of households. This, it predicts, will likely lead to slower growth in such markets in the years to come. By contrast, in Asia Pacific, as broadband infrastructure development speeds up, ABI envisages OTT players starting to target the APAC market. It cited Netflix's launch in Australia and New Zealand, and possibly in Japan by the end of 2015, as well as Singapore telco Singtel's HOOQ OTT platform.