Technology

Rise of IPTV cuts dominance of cable and satellite in Canada's pay-TV market

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MUMBAI: Internet Protocol Television (IPTV) in Canada is rapidly gaining momentum at the expense of incumbent cable and satellite services, with IPTV‘s share of pay-TV subscriptions in the country rising to nearly 10 per cent in the third quarter of 2012.

IPTV accounted for 9.6 per cent of Canadian pay-TV video subscriptions in the third quarter, according to IHS Screen Digest Television Intelligence, from information and analytics provider IHS. This is up from 6.6 percent during the third quarter of 2011, and from 1.6 per cent in the third quarter of 2007.

Such an expansion will set the pace for IPTV‘s portion of Canada‘s subscriber base to rise to 18.1 per cent by the end of 2017, in the process causing the combined share of competitive technologies-cable and satellite-to fall to 81.9 percent.

IHS analyst for television research Erik Brannon said, "Canadian telcos are adding IPTV subscribers at a rapid clip as Telus and Bell Canada engage in large-scale build-outs of their infrastructure in order to reach more potential customers. IPTV will continue to make strong gains in Canada in the coming years, eroding the dominant position now held by the cable and satellite services."

Cable and Satellite Suffer: Just as in the US, IPTV‘s growth in Canada has come at the expense of cable and, to a lesser extent, satellite.

Both cable and satellite continued to lose subscribers in the third quarter of 2012, each experiencing a 2 per cent year-over-year decline in subscriber growth compared to the third quarter of 2011.

The response from Canadian cable operators has been muted so far, but there are signs they are not staying idle as subscribers go elsewhere.

For example, Shaw Cable is betting on its massive Wi-Fi hot spot rollout to reduce churn for its broadband service, and ultimately its video subscribers. Broadband service at Shaw is becoming a valuable component to its bundled services and will play a pivotal role in retaining pay-TV subs.

IPTV becomes must-see TV: Bell Canada in the third quarter reported explosive growth for its IPTV service, Fibe TV. Fibe TV added 42,973 net new customers to pass 200,000 for the first time, with net additions in the same quarter of 2011 amounting to 20,297.

The company now accounts for 18 per cent of IPTV subscribers in Canada, leaving Aliant, SaskTel and Manitoba Telecom (MTS) each with less than 10 per cent of the market.

Telus remains Canada‘s IPTV giant, holding 56 per cent of the total Canadian IPTV market, with its service capturing 43 per cent of the third quarter‘s IPTV growth. SaskTel, the first IPTV operator to enter the market in 2002, together with MTS held nearly an equal share of IPTV subscribers until Telus leapt ahead in 2010.

If the rapid uptake of IPTV services from Bell Canada and Telus is any indication, there will be significant pressure upon incumbent pay-TV operators when they enter new markets.

Facing Down OTT: As a whole, Canada‘s pay-TV industry has been able to fend off the threat from OTT services in large part due to strict data caps and limited OTT options. However, the situation could change if data caps start to loosen up and broadband subscribers continue to increase.

Netflix, for instance, now has more than 1 million subscribers in Canada, even though its content offerings are still relatively limited compared to the US.

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