There’ll be more Canadians subscribed to OTT services, like Netflix and Crave, by next year than traditional television, according to a forecast released this week by Convergence Research Group (CRG).
The Battle for the Canadian Couch Potato: OTT and TV says based on 28 OTT providers, led by Netflix (the report does not assign revenue to Amazon Prime which did not increase price with its addition of video in Canada), it’s estimated Canadian OTT access revenue grew 33% to $1.12 billion in 2018. It predicts revenue will hit the $1.51 billion mark in 2019 and that by 2020 there will be more OTT subscriber households than TV subscribers in Canada.
CRG estimates that in 2018, Canadian cable and telco satellite TV access (not including OTT) revenue declined 2% to $8.58 billion. The report says with a decline of an estimated 204,000 Canadian TV subscribers in 2018, an additional 253,000 customers will unsubscribe from traditional TV service in 2019.
With Canada’s TV subscriber base declining at a rate of 2% a year since 2015, CRG believes that rate of decline will uptick to 3% for 2020-2021, at the expense of fewer telco additions as cable & satellite have not added TV subs since 2010.
“Although Canada currently has less than half the OTT plays of the US, Canadian programmers/TV access providers are increasingly exposed to the global OTT war being waged by large American programmers and independent OTT providers,” the report states.
As the OTT market expands, Convergence asserts that in addition to having more choice, premium content is becoming less affordable for Canadian channels.
“American programmer direct to consumer OTT plays have started to impact with CBS All Access going direct and not selling select series to Canadian distributors, NBCU’s hayu up against its’ linear Canadian distributors, and Discovery’s launch of GolfTV OTT in Canada. We expect more entries as programmers expand their OTT platforms globally,” says CRG.
“Simultaneously, Canadian programmers/TV access providers face independents’ Amazon, DAZN, & Netflix (as well as Apple, Facebook, Google, Quibi) rising content spend, putting pressure on traditional TV and in certain cases providing US & international programmers more leverage in Canadian negotiations.”
CRG estimates that the number of Canadian households without a traditional TV subscription will hit 32% this year, up from 30% in 2018, and 28% in 2017. The report estimates 346,000 more households gained so-called “cord cutter” status in 2018, while residential broadband subscriber additions amounted to 387,000 and broadband revenue grew 8% to $8.68 billion (higher than Canadian TV access revenue).
It says an estimated 1.49 million Canadian wireless subscribers were added last year, the largest annual subscriber bump since 2011, with wireless service revenue up 5% to $21.2 billion. CRG forecasts similar additions and revenue growth in both wireless and broadband for 2019.
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