Satellite TV Industry Revolutionizing the Way We Watch TV
http://www.satellitemarkets.com/news-analysis/satellite-tv-industry-revolutionizing-way-we-watch-tv
Los Angeles, Calif. , April 5, 2012- The Satellite TV industry is in the midst of a revolution according to a report by IBISWorld. Satellite TV providers supply popular family shows, news, movies, sports, documentaries and other products to a growing swarm of eager subscribers willing to pay for in-home entertainment. 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,” says IBISWorld industry analyst Doug Kelly. Higher spending on industry services is anticipated to result in 5.6% annualized revenue growth to $41.4 billion in the five years to 2012. This climb includes an expected 3.8% increase in 2012 as more consumers continue subscribing to satellite TV, especially after external competitor Netflix abruptly announced price increases for its streaming service in July 2011.
High initial fixed costs, which major players have already paid off, are a defining aspect of the Satellite TV Providers industry. Not only are they prohibitive to industry start-ups, but 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, says 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. Major company Home2Us Communications Inc. comes in a distant third.
Over the next five years, the industry will 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. More aggressive marketing tactics are anticipated to cut slightly into industry profit. As a result, IBISWorld forecasts slower 3.1% annualized revenue growth over the next five years to $48.3 billion in 2017, driven largely by new subscribers.
Household creation is projected to flourish toward the end of the period, growing an estimated 1.2% annually on average through 2017. This growth will partially drive new subscriptions.
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