Cord-Cutting Spreads Beyond U.S. Borders, Says IHS

LONDON—Cord-cutting is spreading beyond the U.S. borders with declines in pay TV subscriptions touching 13 other markets, says a new report from market analyst IHS Markit.

In addition to the U.S. subscription falloff, the report, “Global Cord-Cutting Tracker 2017,” identifies declines in Brazil, Mexico, Hong Kong, Canada, Sweden, Denmark, Japan, New Zealand, Norway, Singapore, Israel, Venezuela and Ireland.

Six of the 14 markets experiencing subscriber losses also recorded declining revenue last year. However, the U.S., Brazilian, Mexican, Swedish, Japanese, New Zealand, Norwegian and Venezuelan markets were able to compensate for subscriber losses by increasing what they charge remaining customers, according to the report.

[Read: Paywizard: Cord-Cutting Trend Offset By 'Pay-TV Polygamists']

For example, the U.S. loss of 3.3 million pay TV subscribers last year was offset by upsells and price increase that ended up generating more revenue for pay TV operators, says IHS Markit.

2017 saw the first pay TV subscription decline in Latin America since 2002. While cord-cutting contributed to the loss, economic difficulties played an important role in the subscription losses in Brazil (down 617,000) and Mexico (down 192,000). In Venezuela, 16,000 subscriptions were cancelled as the country’s financial crisis worsened, says the report.

Overall, North America suffered the biggest-ever decline in annual pay TV subscriptions with 3.5 million customers evaporating. Since 2012, the region has seen a decline of 7.1 million subscribers, says the report.

By way of comparison, Netflix and other OTT subscription services have seen an increase of 101.3 million subscribers for the same period. More than 26 million OTT subscriptions were added in 2017 alone.

The sting of cord-cutting for pay TV providers extends beyond cable TV. Satellite TV subscription services in several regions are suffering, too. In both North and Latin America last year, satellite TV subscriptions declined more than any other platform. In North America, 1.8 million satellite pay TV subscriptions disappeared, while Latin America experienced a decline of 882,,000, says the report.

[Read: Millions Flee Pay-TV; Revenues Slide, Say Researchers]

One attempt to stop the bleeding has been the launch of standalone streaming services by pay TV operators that compete with Netflix, Amazon Prime Video and other OTT services. However, these services typically cost less than tradition pay TV subscriptions, have a lower average revenue per user and are worth less to providers, says Ted Hall, director of research and analysis for TV and video and IHS Markit.

Over the next five years, IHS Markit forecasts a net decline of 8.5 million pay TV subscriptions in North America as cord-cutting continues. However, Brazil pay TV subscriptions are expected to grow as the nation’s economy strengthens.

OTT subscription growth is expected to outstrip that of pay TV everywhere except for the Middle East and Africa for the period, says the report. Overall, 409 million OTT subscriptions will be added around the world through the end of 2022, with the Asia-Pacific region accounting for nearly 66 percent of the growth, the report says. 

Phil Kurz

Phil Kurz is a contributing editor to TV Tech. He has written about TV and video technology for more than 30 years and served as editor of three leading industry magazines. He earned a Bachelor of Journalism and a Master’s Degree in Journalism from the University of Missouri-Columbia School of Journalism.