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Pay-TV Subscriber Losses Continue in North America

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.

The latest market study by Strategy Analytics indicates that the top twenty pay-TV operators in the U.S. -- accounting for more than 95 percent of the total market -- reported subscriber losses of 479,000, while the Pay-TV operators in Canada lost 53,000 customers.

According to their assessment, total subscribers among the tracked pay-TV operators in North America declined at the highest rate that they've seen so far.

The transition from analogue to digital television platforms hasn't improved the situation. Digital TV subscriptions in the U.S. market fell by 62,000. Moreover, in Canada, digital TV subscriptions declined for the second straight quarter -- with estimated losses totaling 9,000.

While subscriber counts have been somewhat volatile for several years, the Average Revenue per User (ARPU) has almost consistently been on an upward trajectory.

By and large, pay-TV service providers in North America have been able to maintain their profitability by consistently increasing subscription fees for their remaining customers.

"The subscriber losses in the second quarter were across all of the pay-TV platforms, including cable, satellite, and IPTV. However, going forward, we believe there are clear opportunities for the pay-TV providers as they begin to roll out Over-the-Top (OTT) video services, similar to the Dish Network Sling TV offering," said Jason Blackwell, research director at Strategy Analytics.

Regarding the specific second quarter results of the pay-TV operators, Dish Network lost 81,000 subscribers, even after accounting for growth in the company's new OTT service, Sling TV.

At the same time, the Dish Network Video ARPU increased by 2.5 percent quarter-over-quarter and 4.5 percent year-over-year. Similar increases were reported by DirecTV, Charter, and Time Warner Cable.

Blackwell added, "Verizon will debut its OTT service this year, along with Comcast and CenturyLink. Although nothing has been announced, AT&T (with its DirecTV acquisition) is predicted to roll out an OTT video service, and the company is uniquely positioned to tie that into a variety of nationwide bundles that could also include fixed or mobile broadband, satellite TV, and wireless phone service."

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