Profit margins will tighten as operators boost marketing to retain subscribers
Los Angeles, CA (PRWEB) January 22, 2013
The Satellite TV Providers industry has posted solid growth over the past five years, supplying a variety of programming to a broadening subscriber base willing to pay for in-home entertainment. According to IBISWorld industry analyst Kevin Boyland, “New networks, more channel offerings and bonus features have continued to strengthen the industry's appeal to consumers, even as disposable income dropped during the recession.” For example, the introduction of high-definition (HD) TV not only vastly improved the quality of programming, but also attracted new subscribers. Higher spending on industry services is anticipated to result in an annualized revenue growth rate of 5.6% over the five years to 2012. In 2012 alone, revenue is expected to have increased 3.8% to $41.4 billion as more consumers subscribe to satellite TV.
High initial fixed costs, which major players have largely already paid off, are a defining aspect of this industry. While they are often prohibitive to industry start-ups, they also indicate industry backers' high confidence in the success of industry firms. Satellite TV is attractive to investors 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, increasing the medium's marketability. Further, with satellites already in orbit, existing companies, like DirecTV and Dish Network, only incur low costs per additional subscriber. By keeping other costs stable, the Satellite TV Providers industry is expected to have earned a healthy profit in 2012. The industry’s largest players are mainly responsible for this large profit margin, given that they control the vast majority of industry market share. “Due to high start-up costs, regulation and intense competition, few small producers have managed to develop a niche market, allowing these two behemouths to continue turning high profit,” says Boyland. However, as internal and external competition heat up, firms may be unable to pass on increasing programming costs to customers, which may dampen profitability.
Over the next five years, the industry will face escalating competition from other media. Therefore, more aggressive marketing tactics are expected to cut slightly into industry profit. However, the ability of major players to continue developing ways to retain and attract subscribers will determine the level of industry revenue growth. With an anticipated rise in new subscribers during the five years to 2017, IBISWorld forecasts revenue to increase moderately. The number of households is projected to flourish toward the end of the period, realizing an overall gain from 2012. This growth will partially drive increasing subscriptions. For more information, visit IBISWorld’s Satellite TV Providers in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
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
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.