Profit margins will tighten as operators boost marketing to retain subscribers
Los Angeles, CA (PRWEB) July 02, 2012
The Satellite TV Providers industry has seen solid growth over the past five years, supplying a variety of programming to a growing subscriber base willing to pay for in-home entertainment. The introduction of high-definition (HD) TV vastly improved the quality of programming and attracted subscribers, even as disposable income dropped during the Great Recession. “In addition to a dramatically improved reputation for quality, new networks, channel offerings and bonus features are strengthening the industry's appeal to consumers,” says IBISWorld industry analyst Kevin Boyland. Higher spending on industry services is anticipated to result in an annualized revenue growth rate of 5.6% over the five years to 2012. Revenue is forecast to increase 3.8% to $41.4 billion in 2012 as more consumers subscribe to satellite TV. However, increasing programming costs, which firms may be unable to pass on to consumers amid intense internal and external competition, may pressure industry profitability.
Over the past five years, major players DirecTV and Dish Network have successfully expanded their scope and revenue by offering an increasing array of services and continually improving their quality. “Due to high start-up costs, regulation and intense competition, few small producers have managed to develop a niche market,” adds Boyland. “These smaller players are able to survive in the Satellite TV Providers industry, but do not compete directly with its major players.” Satellite TV is attractive because of its ability to reach almost any place on the planet. Progressive technologies like new data compression formats have advanced the quality and speed of direct broadcast satellite (DBS) transmissions, making this medium more attractive to consumers. Likewise, with satellites already in orbit, existing companies have low costs per additional subscriber. By maintaining other costs at a relatively level rate, the industry is expected to earn a healthy profit in 2012.
Over the next five years, the industry will face escalating competition from other media. The ability of major players to continue developing ways to retain and attract subscribers will determine the extent of revenue growth over this time. More aggressive marketing tactics are anticipated to cut slightly into industry profit. As a result, IBISWorld forecasts slower annualized revenue growth over the next five years, driven largely by new subscribers. Household creation is projected to flourish toward the end of the period, partially driving increasing subscriptions. For more information, visit IBISWorld’s Satellite TV Providers report in the US industry page.
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IBISWorld industry Report Key Topics
This industry is made up of companies that distribute TV programs on a subscription or fee basis through direct broadcast satellites (DBS). It excludes other satellite telecommunications providers, TV production studios, traditional TV broadcasters and cable networks.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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