MONTEREY, CA – As penetration of HDTV sets explodes in the United States, revenues for HD cable networks will jump as well, according to a new research report.
Last year, revenues for American HD networks were only about $182 million, but that’s expected to balloon to more than $1.9 billion in 2010, says Kagan Research, which published “Economics of High-Definition Cable Networks.”
"Due to capacity constraints and the fact that the number of HD households remains rather small, the market for HD cable networks is still nascent,” said Derek Baine, senior vice president of Kagan Research. “While some HD nets are currently producing positive cash flow, in aggregate, HD networks are expected to lose money through 2006 as subscriber numbers and affiliate and ad revenue catch up with programming expenses.”
MSOs will be put under more pressure to add even more HD networks. The two main American satellite operators, DIRECTV and EchoStar, continue to add customers—totalling an estimated 29.4 million by the end of this year—with growth to continue at about 2.6% per year, reaching 34.2 million by 2011, the report states. Satellite subscribers now account for nearly one-third of all U.S. TV subscribers.
The report predicts that cable subs will rise from 65.6 million at the end of 2006 to 68.1 million in 2011, and subscribers to telco and other forms of multichannel television will expand from 800,000 at the end of this year to 6.5 million in 2011. In all, by 2011, there will be an estimated 108.7 million U.S. households paying for TV services, Kagan predicts.
Helping the HD networks are sales of HD sets. By the end of last year, more than 21 million had been sold in the U.S., and by the end of this year, almost 30% of TV households will have a high definition set, the report predicts. By 2010, nearly 180 million HD sets will have been sold to American consumers, it forecasts.
The number of HD subscribers at the end of 2005 totalled 5.5 million—70% of those were cable customers.
The HD network with the highest licence fee was ESPN HD sports, at $0.84/sub per month, the report found.
