TORONTO – Revenue from television subscriptions in Canada will grow by 8% in 2009, forecasts Toronto’s Convergence Consulting Group.
“TV access revenue”, says a key portion of one of its 2009 editions of “The Battle for the North American Couch Potato” was $7.2 billion in 2008 (from cable companies, satellite and telco TV providers), most of which comes from Canadian MSOs.
“Cable has added basic TV subs every year since 2004, and the report forecasts the segment will effectively maintain its dominant TV subscriber market share – from 73% of TV subscribers at the end of 2008 to 71% by the end of 2011. Satellite looks to maintain market share while telcos will have 3% of TV subs by the end of this year, up from 2.5% as ’08 closed, rising to 4.5% at the end of 2011.
Stateside, TV access revenue in 2008 was about $80 billion, with 6% growth coming this year, reads the report. But telcos – especially Verizon and AT&T – are doing far better there than Canadian telcos (on a mass scale, as SaskTel and MTS have seen success in their territories). The Convergence report predicts American telco TV services will own 5.6% of the American market by the end of 2009, rising to 10% by year-end 2011.
Canadian MSOs are also still adding telephone subscribers at a quick pace – thanks to bundled offerings with broadband, to the detriment of the traditional telcos, which continue to lose land lines.
“Cable’s high customer overlap of TV and broadband subscribers, bundled price and convenience, are key to its ongoing telephone sub additions. We estimate cable’s double play base of TV and Internet subscribers year-end 2008 at 64% (we forecast 77% YE2011). The telcos residential telephone to broadband overlap was 39% at YE2008 (we forecast 58% YE2011),” reads the report.
“Hence it’s easier for cable to add, assuming competitive pricing, voice customers off this overlap than for the telcos to add TV customers. Cable telephone has also been a key driver for cable Internet and TV sub gains.”
Despite cable’s gains in Canada, the video market here clearly lags the U.S. when it comes to digital video recorder and high definition penetration. (The report’s executive summary doesn’t mention it, but DVR market-driver TiVo has never come north and when it comes to HD, the U.S. simply has far more content available.)
As of the end of ’08, 13% of Canadian television subscribers have a DVR (in the U.S. it’s at 31%) and 20% subscribe to HD, reads the report. (29% Stateside). The Couch Potato says those figures will climb to 29% and 45%, respectively, in Canada, by the end of 2011 (50% and 54% in the States).
Wireline losses will continue among the Canadian ILECs as customers not only jump to cable – but also to wireless (thus the spectrum-buying decisions in 2008 of Canadian MSOs Videotron, Shaw and EastLink).
“The entrance of new wireless players and lower prices will impact both the residential wireline and wireless phone markets,” says the report. “The U.S. has already seen major impact in this regard.” More than 20% of American homes are wireless-only households.
“We forecast Canadian residential telephone wireline loss at 9% per annum for both 2010 and 2011. We estimate wireless-only households at 6% at YE2008 and forecast 13.5% by YE2011. Currently just 20% of the telcos residential wireline telephone loss is due to wireless substitution, we forecast that will climb to 45% in 2011,” adds the report.
