TORONTO – Canadian telcos will gain more TV market share this year, while the number of cable and satellite subscribers will continue to decline, according to a new report from Convergence Consulting.
The report, part of the company’s “Battle for the North American Couch Potato” series, estimates that Canadian TV market share for telcos will increase to 14.6% by year-end 2013, up from 11.3% the previous year, with Telus and Bell leading the pack. Cable’s market share is expected to decrease from 66% in 2012 to 63.7%, and satellite share is forecast to decrease to 21.7%. “Both cable and satellite saw significant TV subscriber loss in 2012,” reads the report. “We estimate 2012 Canadian cable, satellite, telco access provider TV subscription revenue grew 4% to $9.1 billion. At YE2012, we estimate 40% of Canadian TV subscribers had PVR and 59% had HD (services).”
The reports estimates 52,000 Canadian TV subscribers were added last year, and an additional 70,000 subscribers are forecast for 2013 – both of those are a significant decrease from the 233,000 subscribers added in 2011.
Using Convergence’s own “TV Cord Cutting Model,” which takes into account annual subscriber additions, economic conditions, and the digital transition, the report estimates 250,000 Canadian TV subscribers cut their TV subscriptions in 2011-2012 and opted to watch their content on Netflix or other online sources, up from 178,000 in 2012. The number of Canadian TV cord-cutting households is estimated to reach 380,000 by the end of this year.
Canadian residential broadband revenue grew 8% to $5.49 billion, according to the report. While telcos have narrowed the gap on annual residential broadband subscriber additions, the report forecasts that cable’s market share will see a slight decline by 0.6% to just over 58% through 2015.
Canadian telco residential wireline telephone line loss in 2012 was an estimated 8.2%, up from 7.5% in 2011, and the research company forecasts an 8.7% loss for 2013. Wireless substitution was responsible for an estimated 62% of the 2012 loss. “We estimate Canadian wireless-only households at 18.2% YE2012 (growth accelerated in 2012 and 2011), up from 14.4% YE2011, and we forecast 22% YE2013 and 29.4% YE2015. Cable represented 38% of residential wireline telephone subs YE2012, and we forecast 41.5% YE2013,” reads the report.
In the wireless sector, the report estimates weighted Canadian wireless service ARPU grew by 0.3% in 2012, after declines in 2011 (of 1.2%) and 2010 (2.2%). Continued positive growth is expected for 2013 and 2014. Canadian wireless subscriber smartphone penetration is expected to reach an estimated 55% for YE2012 and 66% for YE 2013.
When not taking into account promotional pricing, independent new entrants (Wind, Mobilicity, Public, Videotron) can undercut incumbents and their discount brands by up to 50% on combined voice/data packages, says the report, which adds that new entrants into the market will continue to chip away at incumbents’ market share, with an estimated 2.35 million Canadians (8.1%) by YE 2013, up from 1.69 million in YE 2012.
