Video Subscription Market Appears to Grow, Despite Smaller Customer Base

Most of the money being made in video entertainment continues to be made by providers of traditional forms of media, despite the growth of over the top and online alternatives.

That remains true even as users of traditional products slowly shift away towards new formats.

Most surveys likely would show that younger consumers buy video subscription services at lower rates than older consumers.

Though the actual amount of revenue lost to cord cutters (people who drop existing subscriptions), cord thinners (people downgrading levels of service) or cord cheaters (people supplementing a video subscription with an over the top service) remains rather negligible, the arguably bigger problem is cord avoiders.

Cord avoiders are people who never have bought a video subscription and do not see any reason to do so, as those sorts of non-customers are concentrated among younger consumers starting their own households.

The reason is that some incremental revenue pressure from what still remains a one percent a year attrition is less important, long term, than a change in consumer demand for the product.

In the near term, service providers likely can find ways to maintain higher revenues on slightly smaller customer bases.

By 2017, Infonetics Research expects the global subscription TV market to grow to $270 billion, at a 2012 to 2017 compound annual growth rate of about five percent. U.S. traditional video subscription revenue might grow at a slower two percent annual rate from 2013 to 2017.

Alternative forms of video consumption will grow faster, but the revenue magnitudes will be quite different. video subscription business represents something on the order of $90 billion annually. Netflix will earn something more than $4 billion in 2014, by way of comparison.

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