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The global multichannel market surpassed the one billion subscriber mark at the end of 2016 as 60% of households paid for some form of traditional subscription video service. SNL Kagan research indicates in 2016 that the global multichannel market grew by 6.7% year-over-year, exhibiting the fastest growth rate since 2012, largely on the back of unprecedented subscriber gains in Asia, particularly in China.
Global multichannel video subscriptions are forecast to increase to 1.2 billion by 2021, adding a total of 203.1 million net subs over a five-year period, while multichannel penetration is forecast to increase to 65.4% in the next five years.
While cable TV is expected to remain the largest platform on a global scale in the next five years, its share is forecast to decline from 58.2% in 2016 to 50.8% by 2021, largely due to analog subscriber churn and market-share gains by DTH and IPTV operators. IPTV, the fastest-growing of the three major pay TV platforms, is modeled to capture a 22.7% market share by 2020, up from 17.1% in 2016, translating into a 9.8% five-year subscriber compound annual growth rate.
Asia, home to the two largest pay TV markets, China and India, accounts for nearly 60% of the world's multichannel subscribers. The region increased its global subscriber share from 56.8% in 2015 to 58.7% in 2016. Driven by aggressive digitization efforts and increasing adoption of emerging IP technologies in China and India, the region is projected to increase its global share of pay TV subs slightly in the coming five years to 61.5% in 2021, with China claiming almost a third of the world's multichannel subs. In 2016, Asia was also the fastest-growing multichannel region, with subscribers increasing by 10.1% year-over-year, compared to 7.7% year-over-year in 2015, primarily driven by historically highest subscriber net additions in China. In 2016, the country added close to 40 million multichannel subs, 98% of which were gained by the IPTV platform. China's IPTV market grew by 85.3% year-over-year in 2016, compared to 36.4% year-over-year in 2015, spurred by burgeoning fiber-optic network deployments nationwide.
Western Europe and North America rank as the second- and third-largest multichannel regions after Asia, accounting for 11.2% and 10.9% of the global total in 2016, respectively. Driven by strong growth in IPTV subscribers in Europe offsetting a decline in cable TV subs, as well as continued decline of the North American multichannel market, in 2015 Western Europe overtook North America as the world's second-largest multichannel region. However, both regions' share of the global total is projected to decline slightly over the next five years.
North America is the only region where a decline in multichannel penetration and subscribers is observed. Multichannel penetration started declining in the region in 2010, while subscriber decline followed in 2013. Cord-cutting, driven by relatively high prices of video services and wide availability of affordable OTT alternatives, is the prime culprit behind North America's pay TV penetration and subscriber decline — a trend projected to continue for the foreseeable future.
Ranking global regions by multichannel penetration produces quite different results, with North America leading the world with an 81.3% pay TV penetration rate as of year-end 2016, down from 82.8% in 2015. The region is followed by Western and Eastern Europe, which achieved 63.5% and 62.0% penetration rates in 2016, respectively. We forecast that multichannel penetration in Eastern Europe will overtake Western Europe by 2018.
Analyzing global regions by multichannel platforms, cable emerges as the dominant multichannel platform in all of the regions except for Latin America, the Middle East and Africa, where DTH leads due to the limited availability of cable and fiber networks. Leading multichannel platforms are not expected to change in the next five years.
The global multichannel economy generated $235.8 billion in video service revenues in 2016, with North American pay TV providers earning more than half of that. Western Europe remained the second-largest multichannel economy, accounting for only 17.6% of the global total in 2016.
Thanks to comparatively high video service ARPUs, North America should remain the most lucrative multichannel economy in the coming five years, despite being only third-largest by subscribers and experiencing subscriber declines. The region is modeled to account for 46.1% of global video service revenues by 2021. Despite having the lowest pay TV ARPUs among the six regions analyzed, Asia is projected to overtake Western Europe as the second-largest multichannel economy by 2021, due to the sheer size of its market.
Global Multichannel is a service of SNL Kagan, an offering of S&P Global Market Intelligence.