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Global Pay-TV Forecast to Reach $317.5 Billion in 2019

The traditional video entertainment industry in developed nations had a difficult period of transition last year, as retail sales of content on DVD and Blu-ray discs was either flat or declining, and pay-TV revenues were somewhat spotty. The days of huge gains appear to be over in many of the key saturated markets.

Regardless, some industry analysts remain hopeful for a market recovery.

The global pay-TV subscriber base increased by a little more than 5 percent in 2013, raising the total to 901.1 million. However the average revenue per user (ARPU) dropped to $23.80 in 2013 -- from $24.10 in 2012.

"In general, the pay-TV market grew both in terms of subscribers and service revenue across all pay-TV platforms. Overall pay-TV service revenue reached almost $250 billion in 2013," said Jake Saunders, vice president at ABI Research.

Pay-TV ARPU in North America increased around 4 percent to $76.00 in 2013. According to legacy pay-TV operators, the growth in ARPU is due to a growth in the proportion of customers with advanced pay-TV set-top boxes and upgraded High-Definition programming packages.

Unfavorable currency exchange rates in Latin American countries have contributed to a US Dollar equivalent decline in the pay-TV ARPU for the region at the end of 2013 to $34.6 (5 percent reduction from 2012).

Subscription of HD-TV services continue to grow in 2013 accounting for 41 percent of total pay-TV subscriber base in 2013. ABI forecasts that the subscriber base of HD-TV services will continue to increase to 57 percent of total pay-TV subscribers in 2019.

As competition in the pay-TV market has increased, operators continue to offer more HD programing services, advanced set-top boxes and innovative services in the hope of boosting pay-TV ARPU.

ABI anticipates that the worldwide pay-TV subscriber base will reach 1.1 billion subscribers in 2019. In particular, the increasing broadband connectivity will help the nascent IPTV market growth.

The IPTV market is likely to grow at a CAGR of 9 percent over the next five years to reach 160 million subscribers in 2019. The growth typically comes from short-term discount promotions -- where the telco gains the subscribers of the incumbent service provider. Few IPTV subscribers are actually new to pay-TV.

The global pay-TV market is expected to generate $317.5 billion in 2019, according to the current forecast by ABI Research. But this estimate likely assumes no further market disruption -- or erosion of subscriber base -- by the advancing movers and shakers in the low-cost over-the-top (OTT) video entertainment sector.

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