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TV subscriptions not threatened by ‘cord-cutting,’ report says

Netflix CEO Reed Hastings makes a keynote speech at the Canada 3.0 conference in Toronto, May 14, 2013.

Michelle Siu/The Globe and Mail

Canadians will continue to sign up for television subscriptions despite a proliferation in online alternatives, although the pace of subscription growth for the country's television subscribers is expected to slow over the next four years.

PwC's Global Entertainment and Media Outlook 2013-2017 forecasts that the number of television subscribers in Canada will increase by 800,000 by the end of 2017 (or 160,000 a year). Until recently, the industry was adding about 220,000 each year, but services such as Netflix have cut into that rate of growth as consumers embrace technology that allows them to watch their favourite shows for less money.

But several studies have suggested that so-called "cord cutting," whereby consumers cancel their traditional television packages in favour of online alternatives, has yet to have a serious effect on subscriber numbers in this country. Consulting firm Deloitte Canada recently said 99 per cent of those who subscribe to paid television service through traditional cable, satellite and IPTV providers will remain customers because they don't want to miss out on live programming and the reality shows that everyone talks about incessantly after they air.

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There are about 12 million Canadian households with television subscriptions in Canada. Netflix, the dominant online player, has signed up an estimated 2 million subscribers since launching here two years ago.

While the industry may continue to add subscribers, competition between cable companies and IPTV providers (Internet protocol television) will likely drive down revenue. The industry pulled in an estimated $6.9-billion in 2012, and is forecast to bring in $6.4-billion in 2017.

"All the main operators compete for broadband and telephony customers as well as TV subscribers and, in a market with limited growth prospects, competition is likely to become sharper," the report stated.

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