Gartner’s Derek O’Donnell has shared the company’s predictions for the pay-TV market ahead of CES 2016.
Gartner predicts that worldwide end-user spending on video media services will reach $316 billion next year: a 6% YoY rise. Of this revenue, pay-TV services will represent the largest proportion, generating $293.8 billion (up 5% YoY). Despite slowing pay-TV subscriptions, the increase in revenue will be driven by new value-added services and premium content.
End-user pay-TV service penetration will grow 1.5% YoY in 2015 in mature markets, and 1.3% in 2016. By 2019, though, subscription growth will slow to 0.2% – and some regions will begin to show small attrition. Market saturation and changing TV viewing habits are the main reasons for this. One of the changing habits is the increased consumption of VoD content, especially amongst millenials. Gartner expects that, by 2019, some consumer groups will reduce their spending on premium pay-TV content by up to 40%, and instead subscribe to one or more VoD services.
Millenials subscribe to fewer pay-TV services than other age groups. A survey conducted by Gartner this year showed that consumers under the age of 35 were 4% less likely to subscribe than the rest of the population. By 2019, Gartner predicts that as many as 50% of newly-formed (i.e. millenial) households in mature markets will never subscribe to a pay-TV service, and will rely solely on VoD services.
Developing markets present a rosier picture, with those in Sub-Saharan and North Africa, as well as the Middle-East, experiencing 18% growth in household subscriptions this year and 14% in 2016. The launch of more affordable, pan-African pay-TV satellite service providers, as well as the digital switchover, are factors in this growth.
As for new technology, Gartner predicts that the launch of UltraHD TVs will have an impact on what the consumer spends on pay-TV services, rather than increasing the number of subscriptions.
As for CES, it is forecast that companies will show innovations such as flexible displays at lower price points, and possibly the first commercial 8k set. Voice recognition technology is also expected to be announced for many video streaming boxes and TV sets.
