Traditional forms of video entertainment are already saturated in most of the developed nations around the globe. Meanwhile, some of the more promising emerging markets are growing at a more gradual rate than was anticipated, due to current economic pressures.
According to the latest market study by ABI Research, the worldwide pay-TV market grew by just 4 percent in 2014 to reach 923.5 million subscribers.
"Despite the growth in subscriber base, weak currency exchange rates resulted in a slower increase of pay-TV market service revenue. Worldwide, the pay-TV market generated $257 billion in 2014 and is expected to surpass 1.1 billion subscribers in 2020 with a CAGR 2.7 percent," said Jake Saunders, VP and practice director at ABI Research.
Cable and terrestrial TV markets had weaker growth rates in 2014 compared to satellite and IPTV platforms. However, high definition (HD) penetration is increasing across all pay-TV platforms because of the increasing number of HD channels added by operators.
In 2014, 44 percent of the worldwide pay-TV subscriber base were HD subscribers, with the highest HD penetration in Western Europe and North America. HD penetration is expected to reach 60 percent of the total pay-TV market in 2020.
Pay-TV operators are now moving towards Ultra HD (also known as 4K) service. In November, U.S. satellite operator DirecTV launched its first 4K programming without any additional monthly charges to subscribers with its HD DVR, Genie and DirecTV 4K Ready television set, which is any of Samsung’s Smart 4K TV models.
Online video streaming services such as Netflix and Amazon also started to offer 4K content in late 2014. When content availability and 4K TV set adoption increase, 4K services are likely to become a differentiator for pay-TV service providers.
In 4Q 2014, all U.S. cable operators combined lost roughly 100,000 subscribers, while Comcast gained 7,000 subscribers. The largest American satellite TV provider, DirecTV gained 149,000 subscribers in 4Q 2014, which is the highest net addition since 2012.
As competition in the pay-TV market increases, ABI believes that the quality of content, innovations, and service pricing will be among the most important factors for pay-TV operators to maintain their customer base.
Given the current overall worldwide outlook, ABI Research now forecasts that the global pay-TV market will generate $313 billion service revenues by 2020.