PwC predicts pay TV boost

Consulting firm releases annual media outlook report

Despite recent worries that the economy and cord-cutting could spell trouble for the pay TV biz, a report released Monday predicts that the amount consumers will pay for subscriptions along with what distributors will pay to air channels will rise in the U.S. by a third to nearly $100 billion in 2015.

As part of its annual outlook on the media, consulting firm Pricewaterhouse-Coopers said sub and license fee spending will grow to $99.2 billion in 2015, up from $75.4 billion in 2010. The firm said much of that will be driven by rate increases passed on to subs.

At the same time, revenues at over-the-top video services such as Netflix and Hulu Plus will soar by 350% in the next four years to $1.1 billion, according to the report. But that number will still be paltry compared to pay TV dollars. PwC predicts the number of over-the-top video users will increase to 9 million in 2015. And even though satcasters and telcos have proven worthy competitors to cable, PwC remained bullish about cable.

“On balance, we project continued but moderating declines in the cable universe,” the report said. “We look for cable households to fall to 60 million by 2015, a 0.7% compound annual decline. Cable penetration of TV households will fall from 54.1% in 2010 to 50.3% in 2015. Even with that decrease, cable will remain the dominant television subscription service in the United States.”

In other findings, PwC found:

• Early release windows and a boost in digital households will drive VOD demand while cannibalizing pay-per-view, whose revenues will decline by 3% compounded annually to $2.4 billion in 2015. Meanwhile, VOD’s revenues will rise to $4.2 billion in 2015, up from $2.7 billion in 2010.

• Canada remains the fastest growing country in terms of subscription TV, with a 7.4% compounded annual growth rate that will result in revenues of $11.5 billion in 2015.

• Revenues for the nascent mobile TV subscription business will nearly double between 2010 and 2015, reaching $900 million. The number of subscribers in North America will increase to 5.3 million in 2015, up from 2.7 million in 2010.