Canada's pay-television market has peaked and will begin slowly giving way to alternative services such as Netflix in the coming years, according to U.S.-based IHS.
The market research firm says 92 per cent of Canadian households will have some sort of pay-television service in their home by the end of 2012. That means any service that costs money, from basic cable to digital systems delivered via fibre-optic cable.
Two things are expected to whittle that number down in the coming years: High prices and lower-priced alternatives that deliver niche programming without the commitment to a slew of channels.
"The Canadian peak in pay-TV subscriptions comes three years after the same event occurred in the United States," IHS stated in a release. "Canada reached the peak later due to delayed economic effects and severe data caps implemented by cable operators in the country."
The rate of decline is expected to be slow – IHS predicts that rate of pay television penetration will be 89.9 per cent by 2016.
From the report:
- “Cable continues to dominate the pay-TV business, but has been suffering declines in basic video subscriptions since 2011. The cable operators have been losing share to upstart IPTV players, such as Telus and Bell Canada. Telus and Bell's Fibe TV are increasing their subscribers at a breakneck pace, even at the expense of satellite.”
- On the satellite front, operators will continue to leverage their rural dominance. Satellite companies also have added IP video on demand offerings to customers with existing high-speed data connections, although effectiveness can be marginalized due to some customers buying from cable operators.
- IPTV players are in the best position in Canada’s pay-TV market with several weapons in their arsenal, including capabilities to offer aggressive promotions, roll out fiber-to-the-home connections and expand the penetration of homes passed.
- Despite the challenge posed by Netflix, IHS believes that Canadian pay-TV operators are better-positioned to fend off the threat from such OTT services. The majority of cable operators provide severe data caps that are easily reached with significant OTT video consumption.”