Linear Subscription TV Continues Slow Subscriber Decline

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Linear Subscription TV Continues Slow Subscriber Decline

Though linear subscription TV is a mature business, indeed likely a product in the declining phase of its product cycle, it is not yet a business in sharp decline. Instead, it continues to decline very slowly, in terms of subscribers, while average revenue per account keeps climbing.

Some 82 percent of U.S. TV households (there are more homes than “TV homes”) subscribe to some form of linear TV service, according to Leichtman Research Group.

The percentage of TV households subscribing to such services is down from 87 percent in 2011,

Among TV households that do not currently subscribe to a subscription service, 14 percent reported they had paid for a service in the past year.

Overall, about 2.6 percent  of TV households bought linear TV service in the past year, but currently do not, compared to 2.5 percent in 2015 and three percent in 2014.

Average (“mean”)  reported monthly spending on such services is $103.10 -- an increase of four percent in the past year. Though the lowest annual increase in five years, that rate continues to remain above the average rate of price increases elsewhere in the economy.

How much longer account revenue can grow at that rate also is an issue, as average household incomes are not increasing, in inflation-adjusted terms. As a result, the percentage of household income spent for linear video is rising.

That is among the reasons for new emphasis on "skinny bundles" featuring a menu of fewer channels, sold at a lower price.

That percentage can continue to rise if consumers reduce spending elsewhere in their budgets, as they have done with spending on mobile services. But even those increases have come at the cost of reduced spending on fixed network services.

The big unknown is whether the rate of decline remains linear, or becomes non-linear at some point in the future, and when that could happen.



source: IHS


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