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Will U.S. Pay-TV Industry Continue Facing Distressing Times?
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Research firm RBC recently predicted that customer churn in the legacy pay TV segment could soon accelerate to around 5 million a year. In June 2017, research firm SNL Kagan had predicted that the U.S. pay-TV industry (consisting of cable, satellite and IPTV operators) will lose approximately 10.8 million customers by 2021. Total pay-TV subscribers will be around 82.3 million at that time, which will be 20% less than the industry’s historical high level.
In terms of customer retention, legacy pay-TV operators are yet to cope with the onslaught of low-cost online video streaming service providers. In the last 10 years, the internal dynamics of the pay-TV market have gradually shifted from legacy pay-TV offerings to low-cost over-the-top (OTT) service providers. According to SNL Kagan, in the first half of 2017, the U.S. pay-TV industry lost 1.8 million customers.
The strong presence of online video-streaming providers is posing a significant threat to the existing pay-TV business model. Video offering, which represented the core business function of cable TV operators, seems to be fast slipping out of their hands.
In order to remain competitive in the market, pay-TV operators stared offering Internet TV with selected TV channels at cheap rate. Technically, Internet TV is similar to pay-TV offerings. Its shows can be viewed using a broadband connection and mobile gadgets like tablets, smartphones, Roku box and smart TV, to name a few.
Major pay-TV operators, such as AT&T Inc. (T - Free Report) and DISH Network Corp. have already launched their Internet TV services. Verizon Communications Inc. (VZ - Free Report) and Comcast Corp. (CMCSA - Free Report) are the latest entrants. Most of these companies are offering both legacy pay-TV as well as Internet TV services with selected TV channels at lower costs.
Interestingly, in June 2017, another research firm, Strategy Analytics, had estimated that major pay-TV operators, who offer both traditionally managed TV services and next-generation online services, will hold nearly 80% of the market share till 2022. They will continue to do so despite facing intensified competition from low-cost OTT service providers.
Nevertheless, pay-TV operators are yet to find out an appropriate trade-off between these two types of services. Making online ventures more attractive is resulting in more subscribers for the new services at the expense of traditional pay-TV business model. Ultimately, the cord cutting due to Internet TV is yet to stop, which is currently the biggest threat for pay-TV operators.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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Will U.S. Pay-TV Industry Continue Facing Distressing Times?
Research firm RBC recently predicted that customer churn in the legacy pay TV segment could soon accelerate to around 5 million a year. In June 2017, research firm SNL Kagan had predicted that the U.S. pay-TV industry (consisting of cable, satellite and IPTV operators) will lose approximately 10.8 million customers by 2021. Total pay-TV subscribers will be around 82.3 million at that time, which will be 20% less than the industry’s historical high level.
In terms of customer retention, legacy pay-TV operators are yet to cope with the onslaught of low-cost online video streaming service providers. In the last 10 years, the internal dynamics of the pay-TV market have gradually shifted from legacy pay-TV offerings to low-cost over-the-top (OTT) service providers. According to SNL Kagan, in the first half of 2017, the U.S. pay-TV industry lost 1.8 million customers.
The strong presence of online video-streaming providers is posing a significant threat to the existing pay-TV business model. Video offering, which represented the core business function of cable TV operators, seems to be fast slipping out of their hands.
In order to remain competitive in the market, pay-TV operators stared offering Internet TV with selected TV channels at cheap rate. Technically, Internet TV is similar to pay-TV offerings. Its shows can be viewed using a broadband connection and mobile gadgets like tablets, smartphones, Roku box and smart TV, to name a few.
Major pay-TV operators, such as AT&T Inc. (T - Free Report) and DISH Network Corp. have already launched their Internet TV services. Verizon Communications Inc. (VZ - Free Report) and Comcast Corp. (CMCSA - Free Report) are the latest entrants. Most of these companies are offering both legacy pay-TV as well as Internet TV services with selected TV channels at lower costs.
Interestingly, in June 2017, another research firm, Strategy Analytics, had estimated that major pay-TV operators, who offer both traditionally managed TV services and next-generation online services, will hold nearly 80% of the market share till 2022. They will continue to do so despite facing intensified competition from low-cost OTT service providers.
Nevertheless, pay-TV operators are yet to find out an appropriate trade-off between these two types of services. Making online ventures more attractive is resulting in more subscribers for the new services at the expense of traditional pay-TV business model. Ultimately, the cord cutting due to Internet TV is yet to stop, which is currently the biggest threat for pay-TV operators.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>