MUMBAI: The growth of the US Internet Protocol Television (IPTV) market continued to decelerate in the fourth quarter of 2012, due to the impact of Hurricane Sandy and the slowing expansion of Verizon‘s FiOS service.

The two major US IPTV players, Verizon and AT&T, reported a combined gain of 326,000 video subscribers in the fourth quarter, down by 19 per cent from the 402,000 acquired during the same period in 2011, according to the IHS Screen Digest.

This marked the second consecutive year of slowing subscriber growth in the fourth quarter, with the total for the last three months of 2011 down 7 percent from 430,000 in 2010, as presented in the figure below.

For the year 2012, net subscriber adds for the two US IPTV services amounted to 1.3 million, down 14 per cent from 1.5 million in 2011.

Through 2017, both the major US IPTV players will continue to see their subscriber gains moderate as the market becomes more mature. By 2017, IHS Screen Digest expects that IPTV in the United States will account for 13.4 million pay-TV households, or 10.8 per cent of all pay-TV subscribers.

IHS senior analyst for television research Erik Brannon said, "Verizon‘s Fios accounted for the majority of the slowdown, as the fiber-to-the-home (FTTH) service added only 134,000 subscribers in the fourth quarter of 2012, down from the 194,000 gained during same period in 2011.

"The disruption caused by hurricane Sandy may have slowed FiOS‘s progress. However, the major reason for the deceleration is that FiOS is largely finished expanding its footprint into new geographic areas of the United States. FiOS‘s penetration is significantly higher than that of U-verse, causing long-term growth to slow for Verizon‘s IPTV service."

Fios Slowing-but Still Growing: Fiox in 2012 increased its video subscriber base by 553,000 to reach 4.7 million, up 13.3 percent from 4.2 million in 2011. This represents a 21 percent reduction from the 701,000 increase in 2011.

Fios‘ video penetration now stands at 33.3 percent, compared to 31.5 per cent at the end of 2011. Still, the largest US IPTV provider grew its video subscriber base by 13.3 per cent this past year.

The Expanding U-verse: AT&T continues to maintain its growth in its U-verse video services, as 192,000 subscribers joined in the fourth quarter of 2012, only 8,000 less than during the same period in 2011.

U-verse video subscribers grew 19.6 percent for the year and now stand at 4.53 million, closing in on FiOS‘s total video subscribers. With a much broader rollout of U-verse, the fiber-to-the-node service passes 72 percent more eligible video homes than FiOS. Given a significantly larger reach and low video penetration of just 18.7 percent, AT&T is also able to maintain steady growth in gains for its IPTV services.

All told, U-verse added 745,000 subscribers in 2012, down just 7.3 percent from 2011‘s net gain of 804,000 subscribers.

IPTV for Everybody: IPTV growth continues in the US, although at a reduced pace. Plenty of room for expansion remains as Fios focusses on penetration levels and U-verse stresses marketing to its lightly penetrated footprint.