Profit margins will tighten as operators boost marketing to retain subscribers
New York, NY (PRWEB) May 22, 2014
Satellite TV providers distribute TV programs on a subscription or fee basis through direct broadcast satellites (DBS). The industry posted solid growth over the past five years, supplying a variety of programming to a broadening subscriber base willing to pay a premium for in-home entertainment. New networks, more channels and bonus features have strengthened the industry, even as disposable income dropped during the recession. The introduction of high-definition TV improved the quality of programming and attracted subscribers to higher-margin packages. IBISWorld expects higher spending on industry services to result in revenue growth of 7.3% over the five years to 2014. In 2014, however, revenue is expected to increase at a slow 2.4% to $48.3 billion, as major companies make large investments that raise expenses and offset the positive influence of increased prices and subscriptions.
Companies in the Satellite TV Providers industry are fighting in a saturated market invaded by fresh external competition. With satellites already in orbit, the industry's major players incur low costs per additional subscriber, keeping profit at a healthy average. The cost of acquiring and maintaining subscribers has increased, preventing providers from passing on programming costs to customers. According to IBISWorld Industry Analyst Sarah Kahn, “Progressive technologies, such as new data compression formats, have advanced the quality and speed of DBS transmissions, increasing the medium's marketability.” New online services and mobile app devices are mitigating losses stemming from customers migrating to online streaming companies. The threat from these fierce external competitors is expected to increase as internet streaming companies, such as Netflix and Amazon, begin acquiring original content, shoving their way into the industry. Selling advertising space via online content offered to subscribers on an on-demand basis may provide a new revenue stream to satellite TV providers.
“The growing availability of online content, along with an expanding market for connected devices, internet-connected TVs and emerging mobile technologies, poses a competitive challenge to traditional TV,” says Kahn. The major players' ability to continue developing ways to retain and attract subscribers will determine industry revenue growth. With a slower annual rise in demand from subscribers, IBISWorld forecasts revenue will increase at a slower annualized rate over the next five years.
For more information, visit IBISWorld’s Satellite TV Providers in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the Satellite TV Providers industry distribute TV programs on a subscription or fee basis through direct broadcast satellites. The industry also includes multipoint distribution system operators that deliver wireless TV programming using ground stations. These companies operate in rural areas and have a negligible effect on industry performance. This industry excludes TV networks and other satellite telecommunications providers.
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