[Satellite TODAY Insider 04-09-12] A broadcast market analysis firm has predicted an increase in consumer spending on satellite TV industry services during the next five years and a 5.6 percent annualized revenue growth to $41.4 billion through 2017, according to an IBIS World report published April 6.
IBIS World Analyst Doug Kelly said the five-year satellite TV market climb includes an expected 3.8 percent revenue increase in 2012 alone, as more consumers continue subscribing to satellite TV after external competitor Netflix abruptly announced price increases for its streaming service in July 2011.
The satellite TV providers industry is in the midst of a revolution, supplying popular family shows, news, movies, sports, documentaries and other products to a growing swarm of eager subscribers willing to pay for in-home entertainment,” Kelly wrote in the report. “For example, the introduction of high-definition (HD) TV vastly improved the quality of shows 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.”
High initial fixed costs are traditionally a defining aspect of the satellite TV providers industry. Kelly said that while costs are they prohibitive to industry start-ups, they also indicate the industry backers’ confidence in the success of this distribution model.
“Satellite TV is attractive because of its ability to reach almost any place on the planet. Advancing 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,” said Kelly. “Likewise, with satellites already in orbit, existing companies like DirecTV and Dish Network have low costs per additional subscriber. Because these two companies dominate the industry, it has a high market share concentration. These companies have successfully expanded along with the industry by offering an increasing array of services and continually improving their quality.”
Despite IBIS World’s enthusiasm for satellite TV’s potential, the firm also acknowledged that the industry would 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,” said Kelly. “More aggressive marketing tactics are anticipated to cut slightly into industry profit.”