The pay television sector is facing perilous times and this is largely due to the rise of online video streaming services such as Netflix and Amazon Prime Video. As matters stand the loss of subscribers for pay television is only expected to accelerate. According to a report by Leichtman Research Group the biggest providers of pay television in the United States that have a combined market share of around 95% lost subscribers numbering 1,945,000 last year. In 2016 the number of subscribers that they lost was 760,000, an indication that the pace accelerated.
In the U.S. market the cable companies control more than half of the pay television market. While the top pay television providers boast of roughly 92.2 million subscribers the leading six cable firms have around 48.1 million video subscribers. In 2017 these cable firms lost around 600,000 video subscribers while in the previous year they had lost 275,000 video subscribers. The leading cable firms in the United States are Comcast, Charter, Altice, Mediacom and Cable One.
Internet speed increases
On its own Comcast lost 151,000 subscribers last year. One of the strategies Comcast has adopted to attract and retain subscribers involves giving incentives for subscribers of its broadband internet service. Late last month Comcast announced that only customers who subscribe to its video and internet service will get internet speed increases.
This will see customers who are subscribed to a plan with download speeds of 60Mbps get the speeds upgraded to 150Mbps while those who enjoy download speeds of 150Mbps will now get download speeds of 250Mbps. Those on 250Mbps plans will get their speeds upgraded to up to 1Gbps. The customers will however not be required to pay more but all they have to do is sign up for video as well. According to analysts this is meant to discourage cord-cutting as those customers who only sign up for internet will have to pay more if they need to have their speeds upped.
During its most recent quarterly financial report, Comcast disclosed that video revenues had declined by 0.8% and this was primarily as a result of the loss of video subscribers. Currently Comcast has more internet customers than video customers and the largest cable firm in the United States keeps increasing the number of broadband subscribers as it loses video subscribers.
As a strategy meant to prop up its dwindling pay television business, it could work for Comcast. This is because of the dominance the cable firm has with regards to internet services. Currently it operates in 39 states and in all the places it is in it offers the fastest internet speeds.
Another strategy that Comcast is employing is imposing data caps. Users of online streaming services may find that they are crossing the monthly data cap of 1TB leaving them with no choice but to pay overage fees. This could have the effect of reducing online video streaming and lead subscribers to non-streaming pay television, a win for Comcast. Another pay-TV-cum-internet service provider, AT&T has also applied the data caps and this could become the norm in the sector.