The video entertainment distribution sector is still evolving. Case in point: the pay-TV operators within North America continue to be challenged during the second quarter of 2015, as significant new subscriber losses pose an ongoing threat to their core business model.
Linear TV will remain a powerful force for some time: a study found that half pay for a TV subscription and 2.5 hours is devoted to linear TV daily. However, 16-24 year-old now average an hour each day watching online TV, which is a third of their daily TV viewing time.
The impact of alternative forms of video entertainment on the traditional pay-TV sector is now very much a global phenomena. What started as a small disruption in North America, with the introduction of Netflix and Hulu service offerings, has evolved into a transformation that reaches far and wide.
The global set-top box (STB) market — including IP/cable/satellite/DTT STBs, OTT media servers, and HDMI dongles — totaled $4.2 billion in 1Q15, slipping 3 percent from 4Q14. IHS expects the number of HDMI dongles sold worldwide to top 27 million by 2019. Meanwhile, cable TV STB sales fell 2 percent worldwide in 1Q15, to $1.5 billion.
Hulu reported that between Q1 2014 and Q1 2015, the share of U.S. viewers on over-the-top (OTT) video devices rose from 44% to 58%. At the same time, desktop and laptop PCs saw their share drop from 41% to 24%, while mobile devices held relatively steady.
Pay-TV operators in Europe and the U.S. spend $10 billion annually to provide phone support and in-home repair services. The lion’s share of these multi-screen pay-TV support costs are spent fixing problems operators didn’t even create.
In 2015, Netflix was expected to have an estimated 69.9 million subscribers around the world, compared with 54.5 million at the end of 2014 — that’s a projected gain of 28 percent.