US bucks pay TV global trend with falling subscribers

Pay TV subscribers in the US has dropped by 2.4 million in a year and is predicted to fall dramatically over the next five years according to the latest research by Ampere Analysis. This fall contrasts with increases in pay TV globally. US pay TV is being hit by the rise of SVoD (Subscription Video on Demand) services, such as Netflix.

Pay TV competes with SVoD
Pay TV competes with SVoD

Since 2016, the number of pay TV subscribers in the US has declined by 2.4 million, equating to a 2.5% decrease in the total customer base. This contrasts with the trend globally, which has seen subscriber numbers increase by around 4% each year since 2013.

While the global trend may be for pay TV growth, the US was not alone in seeing a decline in subscribers in 2017. Several other more established markets also experienced a decrease in pay TV subscribers between 2016 and 2017, such as Denmark (3% decrease) and Norway (1% decrease).

So why are consumers switching? Looking deeper, data from Ampere's most recent consumer survey shows that all of the pay TV services monitored had a significantly lower Net Promoter Score (NPS) than each of the three largest SVoD services. While lower-priced services tend to receive higher NPS scores among subscribers, the size of the disparity in customer satisfaction is large, particularly when compared to cable operators.

The other key factor is price. Within the group of detractors for pay TV subscribers, 23% of respondents listed reasonable price as the main motivation for taking their primary platform – which clearly showcases the attraction of switching to lower cost SVoD services such as Netflix.

In the UK consumers are stacking Pay TV and SVoD services rather than cutting the cord. The over-penetration of Pay TV in the US also means it is inevitable that increasing SVoD subscriptions will affect Pay TV's market share, something that isn't seen to the same extent in a less saturated market, such as Germany.

Posted by Chris Dickinson, technology journalist and editor of the Always On blog. 27th November 2017.