Digital Lifescapes

Telecom and pay TV providers are entering a period where traditional connectivity revenue is growing at well under 2 percent a year worldwide, even as traffic volumes, quality expectations, and competitive pressures continue to rise. This widening gap between flat service revenues and escalating investment needs is the central strategic challenge now confronting network operators, tech vendors, and investors across the communications value chain. This transitional environment forces service providers to pivot from "grow by adding lines" to "grow by monetizing experiences, insights, and ecosystems." Enterprise digital transformation, 5G, fiber, and cloud computing are all necessary enablers, but none of them automatically translate into higher ARPU or margin; they need to be coupled with new value propositions and operating models. Telecom and Cable Market Development According to the latest IDC market study, worldwide spending on telecom and pay TV services is expec...

High-speed internet access from home is essential to participate in the Global Networked Economy. The worldwide residential broadband service market reached a subscriber base of over 1.1 billion users in 2020 -- that's a 4 percent increase from the previous year. Clearly, the COVID-19 pandemic accelerated demand for broadband connectivity. The need for high-capacity residential broadband will remain, even post-pandemic. According to the latest worldwide market study by ABI Research, 5G Fixed Wireless Access (FWA) will be the fastest-growing residential broadband segment to increase at a CAGR of 71 percent, exceeding 58 million subscribers in 2026. Remote working, online learning, and virtual healthcare created new demand for high-speed broadband throughout 2020. The significant increase in the use of internet-based entertainment services also prompted broadband users to upgrade, while more households without broadband access subscribed for the first time. Residential Broadband Serv...

Ongoing disruption of the video entertainment industry is most apparent in North America, where incumbent pay-TV service providers continue to report significant subscriber declines. Past attempts to slow or reverse the customer losses have proven to be unsuccessful. Clearly, it's a huge challenge. Furthermore, relatively new rivals in the sector, such as AT&T and Verizon, have invested heavily to acquire legacy media and online advertising companies in the hope of finding a viable business model to compete with more innovative offerings from a growing list of alternative providers. Video Entertainment Market Development Meanwhile, the growth of subscription over-the-top (OTT) video services has been driving the changing trends in the pay-TV landscape. OTT video services have attracted hundreds of millions of subscribers worldwide, causing pressure on traditional pay-TV operators. This OTT growth trend is expected to continue, reaching a subscriber base of 400 million i...

Security system monitoring via the Internet is still a growth business. According to the latest market study by Berg Insight, the number of monitored security alarm systems in the European market is forecast to grow from 8.7 million subscribers in 2016, at a CAGR of 4 percent, to reach 10.6 million in 2021. In North America, the total number of monitored security alarm systems is now forecast to grow at a CAGR of 2.9 percent from 32.1 million at the end of 2016 -- eventually reaching 37.1 million at the end of 2021. Small alarm systems for businesses and private homes can be divided into two main categories -- local alarms and monitored alarms. The simplest type of local alarm only reacts to activation by ringing bells or sirens to alert the people in the surrounding area and potentially deter intruders. Security Alarm Market Development A more advanced type of local alarm is a self-monitoring security alarm. Monitored alarms are connected to an Alarm Receiving Centre (ARC) tha...

It's interesting to look back over the last few years of ups and downs within the American video entertainment and associated broadband internet access markets. The ongoing market transitions have created a volatile environment, where service providers react to the constantly shifting customer demand. Leichtman Research Group (LRG) reported that the thirteen largest pay-TV providers in the U.S. -- representing 95 percent of the market -- lost about 380,000 net video subscribers in 2015, that's compared to a loss of about 150,000 subscribers in 2014, and a loss of about 100,000 subscribers in 2013. The leading American pay-TV providers now account for 94.2 million subscribers -- the top nine cable companies have over 49 million video subscribers, satellite TV companies 33.7 million subscribers, and the top telephone companies 11.5 million subscribers. Shrinking Demand for Pay-TV Service Truly, 2015 was another year of transition for American pay-TV service providers. Th...

Reporting on the American pay-TV market during the last couple of years was somewhat predictable -- it's been an ongoing decline of subscribers as price increases motivated consumers to consider other video entertainment options. More and more American baby boomers in urban areas bought a digital TV indoor antenna and switched to free over-the-air HDTV broadcast services. For younger adults, traditional pay-TV wasn't viable -- why pay for advertiser-supported content that's available online for free or at a much lower cost via Hulu? Furthermore, as more online subscription video-on-demand services -- such as Netflix and Amazon Prime -- gained momentum, it became clear that the traditional mass-media TV was losing its appeal. Besides, a movement toward the adoption of over-the-top video entertainment seemed to be perpetual. But this market shift could still decelerate, given some of the recent trends. According to the latest market study by Leichtman Research Group (L...

The combined Technology, Media and Telecom (TMT) sector has continued to evolve throughout this year, as ongoing consolidation results in some huge deals. Furthermore, in the near future, we could see more private equity transactions. "Entire private equity funds have formed in recent years around a tech acquisition strategy," according to Mergermarket intelligence, highlighted by a 21.2 percent increase in the value of American technology buyouts ($32.8 billion) compared to the whole of 2014. TMT market activity during the first quarter through the third quarter of 2015 has reached the second highest annual value on Mergermarket record (since 2001) with transactions valued at $534.2 billion, only beaten by 2006’s full-year total at $600.9 billion. Compared to the whole of 2014, Q1-Q3 2015 accounts for 804 fewer deals (2,168 vs. 2,972), but has already seen a $10.8 billion higher deal value (vs. $523.5 billion), according to their latest worldwide market study. The...

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 subsc...

If you look back over the past decade, while the Global Networked Economy has evolved as the leading nations in the Asia-Pacific region continue to expand their infrastructure capabilities, the market for broadband Internet access in America has been remarkably stable. While the FCC has historically been tasked with administering the nation's communications laws and associated regulation, it has struggled to have an impact with the part of its charter that's focused on "supporting the nation's economy by ensuring an appropriate competitive framework for the unfolding of the communications revolution." By and large, even in the major metropolitan areas of the country, a duopoly still exists -- where the majority of wireline broadband internet subscribers are being served by either a single local incumbent cable company and/or a single legacy telephone service provider. Once again, Leichtman Research Group (LRG) has provided some illuminating market data that...

The worldwide pay-TV market has surpassed more than 900 million subscribers during the first quarter of 2015, representing 48 percent penetration, according to the latest study by ABI Research. The traditional pay-TV market is likely to grow slowly but steadily over the next 5 years, mainly boosted by the upside opportunity in emerging markets. "Half of the world's households will have access to pay-TV service by 2017, representing 1 billion subscribers," said Jake Saunders, vice president at ABI Research . As pay-TV service providers experience increasing competition from alternative platforms -- such as over the top (OTT) video services -- ARPU continues to decline across the various platforms in most markets. Many of the legacy operators have added OTT content, multiscreen services, and on demand services in order to compete with alternative video entertainment providers. These services have contributed additional revenue to pay-TV operators, as well as aid in ...

The North American video entertainment distribution industry is a perfect example of where disruption was desperately needed to unseat the incumbent providers who had become complacent. First, it was the video rental stores, then the legacy pay-TV service providers. The only question that most savvy consumers asked was "why did it take so long for someone to offer a substitute to pay-TV?" The introduction of over-the-top (OTT) video offerings, such as Netflix, was a much-needed alternative to the high-cost traditional pay-TV service that's most known for its programming re-runs and perpetual interruptions from advertising. Slow Pace of Pay-TV Disruption The consumer rebellion to abandon pay-TV is becoming a worldwide, but slow moving, phenomena. Parks Associates latest market study found that global OTT video service subscription revenues will increase from nearly $9 billion in 2014 to over $19 billion in 2019. Currently, 57 percent of U.S. broadband households su...

Home automation is reaching an inflection point. Service providers -- including telcos and cable operators -- are introducing a range of offerings to this market. The intersection of home automation services with wearables, Internet of Things (IoT) sensor technologies, big data analytics, and health management services creates new opportunity. A growing roster of smart home services and device providers are using home security monitoring as a beachhead to introduce home automation services, according to the latest worldwide market study by ABI Research. In the key U.S. market, considered by industry analysts to be a bellwether for developed markets around the world, around 15 million more U.S. homes will invest in new connected home security services in the next 5 years. "After decades where penetration into U.S. households stalled, home security adoption is set for significant growth," said Jonathan Collins, principal analyst at ABI Research . However, it will not b...

​Traditional pay-TV service providers in the developed markets have been reacting to ongoing customer churn. Overall growth is now forecast at only 3.7 percent CAGR through 2020, according to the latest market study by ABI Research. In contrast, over-the-top (OTT) video services continue their strong growth, and should experience 26 percent total revenue growth in 2015 -- with a 24 percent CAGR through 2019. With the growing popularity of independent OTT services, such as Netflix and HBO Go, customers are starting to demand a similar experience from their pay-TV subscriptions -- including features such as content search, recommendations and mobile device support. Informed consumers will no longer accept legacy television offerings, as is. The bar of expectations has been raised by the OTT service providers that dared to re-imagine the video entertainment experience. "Comparatively high priced pay-TV bundles are losing customers to more inexpensive, IP-delivered content,...

The seventeen largest cable and telephone service providers in the U.S. -- representing about 94 percent of the market -- acquired 3 million net additional broadband Internet subscribers in 2014, according to the latest market study by Leichtman Research Group . Annual net broadband additions in 2014 were 114 percent of the total in 2013. These top broadband providers now account for 87.3 million subscribers -- with cable companies having 51.9 million broadband subscribers, and telephone companies having 35.4 million subscribers. Other key findings from the market study include: The top cable companies netted 89 percent of the broadband additions in 2014 – compared to 82 percent of the broadband additions in 2013. The top cable companies added 2.65 million broadband subscribers in 2014 – 123 percent of the total net additions for the top cable companies in 2013. The top telephone companies added about 345,000 subscribers – 72 percent of the total net additions for the top tele...

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 cha...

Cable companies around the globe continue to invest in network infrastructure to meet consumer demand for broadband internet access and better tiered service offerings. Infonetics Research reported that DOCSIS channel shipments rose to record levels in 2014 -- that's up 114 percent to 4.8 million worldwide -- as cable operators continue to improve their networks to offer services to customers at ever-higher speeds. Their fourth quarter 2014 (4Q14) and year-end CCAP, CMTS, and Edge QAM Hardware market study tracked cable broadband subscribers and equipment -- including converged cable access platforms (CCAPs), cable modem termination systems (CMTSs), coaxial media converters (CMCs) and edge quadrature amplitude modulation (QAM) channels. "The continued growth of DOCSIS channel shipments is a strong sign of operators ongoing investment to ramp DOCSIS bandwidth and services like IP video by splitting optical nodes and reducing service group sizes via CCAP," said Jeff ...

Looking back, last year was a period of great change and disruption for some of the legacy video entertainment market leaders across the globe. As an example, the overall worldwide pay-TV market is expected to have grown by just 5 percent in 2014 -- surpassing 924.4 million subscribers. Many saturated markets continue to shrink, but there's still pockets of regional expansion. According to the latest market study by ABI Research, global cable TV market growth is now being driven by the Asian-Pacific and Latin American markets. "IPTV is expected to grow a market leading 14 percent in 2014, followed by satellite TV platform at 7 percent. The growth rates of cable and terrestrial TV platforms are expected to slow to around 3 percent," said Jake Saunders, VP and practice director at ABI Research . A combination of the two growth regions is likely to add over 13 million new subscribers in 2014, while the cable TV market in North America is expected to decline by approxim...

The device that broadband service providers place in a subscriber's home could be a point of differentiation, but most are basically alike. The vendors merely attempt to reach parity with the stated industry standard requirements. The products are often procured based upon the lowest price. It's surprising that there is no start-up company that's truly attempting to disrupt this product category. Surely, the service providers would notice if anyone created some meaningful and substantive innovation. Telecom and cable companies have said that they crave vendors that offer new ideas. Worldwide broadband customer premise equipment (CPE) shipments are expected to reach 151.9 million by the end of 2014, according to the latest worldwide market study by ABI Research. "The residential gateway segment continues to grow at a rapid pace. We expect global shipments will grow more than 9 percent in 2014," said Jake Saunders, VP and practice director at ABI Research . ...

What happened to the legacy video entertainment market in America, and why has HBO announced that they will -- for the first time -- choose to bypass the traditional pay-TV distribution channel to reach new customers? While residential broadband internet access will soon reach 100 million households in the U.S. market, legacy pay-TV subscription services have already peaked and are in a slow decline. According to the latest market study by The Diffusion Group (TDG), during the next few months, and for the first time in history, the number of home broadband subscriptions will surpass the number of home pay-TV subscriptions. In September 2014, TDG surveyed 500 adult broadband users that did not subscribe to a traditional home pay-TV service -- such as those offered by cable, satellite or telco network operators. Based upon the TDG market assessment, they uncovered that 14 percent of adult broadband users do not use a legacy pay-TV service -- that's up from 9 percent in 2011, ...

The growth of the over-the-top (OTT) video entertainment industry was previously a primary concern of the American pay-TV sector, as more and more consumers chose to abandon the traditional high-cost cable and satellite TV services. Now this transition has become a worldwide phenomena. Global online video entertainment revenues -- over fixed broadband networks within 51 reported countries -- will reach $42.34 billion in 2020. That's up significantly from $3.96 billion recorded in 2010 and the $19.03 billion expected in 2014, according to the latest market study by Digital TV Research . Following the prior trend, the U.S. market will remain the dominant OTT territory for online TV and streaming video revenues. However, its share of total revenues will drop from 59 percent in 2010 (when the U.S. recorded revenues of $2,326 million) to 37 percent in 2020 ($15,527 million) as the international markets catch up. China's online television and video revenues will soar from jus...