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US Pay TV Subscribers Decline 370k

The number of US households that subscribe to pay TV declined by a total of nearly 370,000 in the second quarter, according to IHS, with cablecos taking the biggest hit.

Broadband came to the rescue, however, with revenue-generating units (RGUs), or individual service subscriber contracts, increasing by 238,000 for the quarter.

IHS said the pay TV business is a mature one that is reaching the saturation point with 85% of American households subscribing.

It said the pay TV side of the business “is seeing some softness, but not the kind of steady or accelerating drops one would expect if — as some are suggesting — the American consumer is abandoning pay-TV en masse in favor of Internet-delivered video.” It said the threat of cord-cutting has been “overblown.”

It is the third time that the US pay-TV market has suffered a sequential quarterly decline, it said. There was a 13,000 increase in pay TV subscribers in the fourth quarter of 2010 and a 477,000 gain during the first quarter of this year. The result is that the total number of US pay-TV subscribers in the second quarter of 2011 was actually slightly higher than they were one year earlier, up by about 68,000 compared to the second quarter of 2010.

Blockbuster Adds 500,000 Subs in 30 Days

Thanks largely to a 90-day free trial for new Dish subscribers, Blockbuster has added 500,000 new subscribers in the past 30 days. Blockbuster didn’t say how many of the new users are free and how many are paying for the service yet. Users that get the free trial still have to opt-in, so at least they are choosing the service — perhaps some of those Netflix subscribers are heading this way. According to reports, STB issues make the new Blockbuster service available to only about 50% of Dish’s existing subscriber base. Blockbuster also said it signed up 300,000 minors total to its “Camp Wanna Watch a Movie” program that offers discounts on age-appropriate titles and related merchandise. Blockbuster is also set to launch a video-streaming-from-Facebook option soon.

180m Smart TVs by 2016

IMS Research confirms a trend we have been reporting for several years: smart TVs will become the primary device for consumers to access OTT video.

“We expect yearly shipments of connected TVs to reach 180 million units worldwide in 2016, and for yearly shipments of connected TVs to begin outnumbering shipments of all other consumer OTT video devices combined by 2015. Pay-TV operators, application developers, content providers, and OTT service providers such as Netflix should all strategically be planning for a future where the most common OTT video device is the television.”

The worldwide installed base of connected TVs is expected to surpass game consoles by the end of this year, IMS said.

IMS says that despite the proliferation of connected devices such as Blu-ray players, smart adapters and game consoles, smart TVs are overtaking the market. We have reported that many consumers are buying smart TVs without realizing their OTT capabilities.

OTT video functionality is becoming a standard in affordable TV, it said, increasing the size of their installed base. IMS said smart TVs will become the most popular and most used for watching OTT videos.

“Televisions, despite their higher price point compared to Blu-ray disc players and game consoles, tend to be more mainstream devices that are purchased in greater numbers and are more universally present in a larger number of households worldwide,” said Paul Erickson, senior analyst at IMS Research. “As broadband penetration increases worldwide and OTT functionality becomes commonplace in all but the lowest-end TVs within the next two years, it sets the stage for connected TVs to be the most globally-significant OTT video device over time.”

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iTunes Takes 65.8% of Online Video Purchase/Rental Market

Rivals to Apple in smartphones and tablets cannot compete against Apple’s ecosystem. Nowhere is Apple’s advantage more obvious than its iTunes, which functions as a media player and an online store for movies, TV shows, books and music plus free lectures and podcasts. Not only that but iTunes is installed on the majority of the world’s PCs, both Windows and Macs.

Apple’s lead is widening in online videos, movies and TV shows for sale or rent.

iTunes’ share of US consumer spending for online videos increased to 65.8% in the first half of the year, up from 64.9% for the same period in 2010, according to IHS Screen Digest’s “Broadband Media Intelligence.”

Apple offers Netflix on its iPads, iPod touchs and iPhones for those that want a monthly subscription video service.

At the same time, competition in online video is increasing, mainly from Walmart’s Vudu, Amazon and LoveFilm.

IHS Screen Digest attributes iTune’s dominance to:

- The studios’ and TV networks’ “evolving movie windowing.”
- Promotions.
- Pricing.
- Rising use of Apple’s AirPlay in Apple and third-party products and online services.

AirPlay is spreading its availability in CE devices and online video and music services. It allows users to stream video and audio from iPods, iPads, smartphones and PCs with iTunes to TV sets or stereo systems that have either an Apple TV or AirPlay embedded.

NewTek, which makes commercial grade video cameras, last week said it’s adding AirPlay in its next upgrade. Acorn Media, which offers a range of UK-produced TV shows and movies on its online subscription service, lets users stream content on its Web site to Apple TVs via AirPlay.

Apple, of course, must approve and certify the AirPlay technology that’s embedded in CE devices and online movie/music services.

Apple is dominating with one hand tied behind its back. It does not allow any other devices, except for its own, to offer iTunes. It’s not available on TV sets or Blu-ray players from Samsung, Sony, LG, Panasonic and the like.

Walmart’s Vudu increased its market share to 5.3% in 2011’s first half, up 1% compared to the same period in 2010. Vudu has been very aggressive at getting its app embedded in lots of CE gear and at offering movies as soon as they appear on DVD.

Where are Sony and Microsoft, we ask, companies that once touted themselves as being leaders in the digital media industry? And Amazon is also missing, so far at least. Their market shares were Microsoft at number 2 with 16.2%, Sony at number 4 with 4.4% and Amazon at number 5 with 4.2%.

Pay TV Booming in India, Brazil

Which OTT subscription service will get to India first? Netflix? Hulu? Amazon?

Netflix says it’s headed to Latin America, Hulu is planning to launch in Japan and Amazon’s LoveFilm subscription service is already operating in most of Europe.

India now has over 100 million households with pay TV, over 70% of its homes, according to a report from Digital TV Research.

It predicts there will be 139 million pay TV homes by 2016 but they will generate a very low ARPU compared to the US, Canada and Europe.

About 8.7 million homes will have a subscription to IPTV within five years, it said. Satcos will increase their subscriptions to 47 million by 2016, up from 30 million at the end of 2010. Cablecos will dominate with 51 million analog subscribers and 32 million digital cable TV subscribers by 2016.

Pay TV Boom in Brazil

Digital TV Research predicts that there will be 22.2 million pay TV subscribers by 2016 compared with 9.8 million at the end of 2010, a 35% penetration. It predicts there will be 11.8 million households getting pay TV from a satco, double the present total. However, the growth rate will slow as telcos begin pushing their IPTV service.

It said satcos’ revenues passed cable as the most popular platform during the first six months of 2011.

Coming changes in government regulations regarding IPTV caused Digital TV to predict that by 2016, Brazil will have 2.3 million paying IPTV subs, 3.6% of TV households.

It said there will be 8.1 million cable subscribers (12.9% penetration) by 2016, up from 5.3 million (9.2%) at the end of 2010.

The “B” and “I” countries in the BRIC contingent look like good places to offer OTT content, by subscription and on-demand over the Net.

MTV Survey: Apps Are Life-Changing & Addictive

Apps are changing the way we live and we are becoming addicted to them, according to MTV Networks, which commissioned the research outfit Latitude to do a study called “”Love ‘Em or Leave ‘Em: Adoption, Abandonment, and the App-Addled Consumer.” The report said 83% of the people it surveyed said they were addicted to apps.

The app is changing the way people think, relate, work, and relax, the report said.

“We learned that apps not only provide small doses of fun, but also offer real emotional and functional value to people’s everyday lives,” said Latitude senior VP Neela Sakaria. “People welcome the opportunity for apps to open their eyes to new experiences, skills, and even relationships. This presents a unique opportunity for content providers like MTV Networks and their advertising partners to extend the entertainment experience into deeper realms of relevance and engagement.”

The report said apps create “me moments” that advertisers can use for their own purposes. Apps can fill what would otherwise be idle moments as indicated by 87% saying, “Apps let me have fun no matter where I am or what I’m doing.”

The report said apps also increase productivity and the achievement of personal goals, as shown by 77% saying apps are their personal assistants.