Market Insight

Networks continue to roll out authenticated apps in Q3 2014

September 10, 2014  | Subscribers Only

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The number of US pay-TV operator authenticated network apps has jumped more than 30 per cent in the last year from 77 in August 2013 to 101 today, latest research from IHS shows. Dubbed "TVE Network Authentication", the strategy is a direct enhancement to pay TV operators' offers and a key focus for operators to try to stem a declining video subscriber base. Both networks and pay TV operators are keen on bringing mobility and technical advancements  to their customers, and at the heart of the strategy is securing rights to live streaming from networks. 

The number of networks which provide live linear streaming in and out of the home through network app/portals increased to 60 during the period. Pay TV operators are hoping out of home live streaming will become more of a factor in attracting pay TV subscribers, by increasing the perceived value of a pay TV subscription.  

Pay TV operators strategies vary when it comes to TV Everywhere. On the high end of the network authentication spectrum Cablevision weighed in at a hefty 91 networks at the time of writing, and industry heavyweight Comcast came in at 76. Depending on the pay TV operator's TV Everywhere services, network authentication is either the main TV Everywhere strategy or it plays a supporting role. 

Q3 2014 Network Authentication by major US. pay TV operator
Pay TV Operator Number of cable network authentication deals Live streaming networks
Cablevision 91 53
AT&T U-Verse 84 52
Cox 84 51
Verizon 83 50
Comcast 76 46
TWC 71 34
Suddenlink 67 39
Bright House 67 39
Mediacom 66 40
DIRECTV 63 36
DISN Network 53 44
Charter 48 39
Cable One 33 23
     

 

 

Our analysis

After nearly  five years of network authentication, it remains to be seen how much of a role TV Everywhere has had in reducing churn or attracting subscribers, however, pay TV operators continue to strike deals with channel groups to provide their customers access to network provided apps and portals, signifying it's seen as an investment and strategy worth pursuing and expanding on. Virtually all fully penetrated US. cable networks are represented, with the exception of Discovery Networks

While network authentication isn't a make or break item for pay TV operators, its inclusion is definitely a positive, although awareness remains a significant problem for the industry. Some operators have been less active in securing network authentication deals, as in the cases of DISH and DIRECTV which have both pursued strategies of technological advancement, in the form of Sling and Genie Go respectively. On the other hand, Comcast has continued to take a leadership role by securing a good number of network authentication deals and also deeply developing its own app. What has made Comcast so successful in the TVE arena is that, within its own app, it provides all significant functionalities: live linear streaming, streaming VOD, download and sync, DVR control, and set-top box remote control. Functionality goes even further for customers with X1 DVR with cloud technology, brining DVR streaming and DVR download and sync to the app.

Will TV Everywhere be the magic bullet that reverses the trend of US. video subscriber loss? IHS thinks not. But combined with significant shifts in business strategy as operators face slower growth of ARPU, this end is possible. 

TV Everywhere in general, and network authentication specifically, represent significant choice to subscribers, the problem that TVE has faced for the past five years has been one of awareness. It is likely that the number of newly forming households who choose not to take a pay TV video subscription will be lessened in proportion to general TVE awareness. 

Even with the number of network authentication deals growing steadily each quarter, IHS expects that the number of US pay TV video households will continue to decline. This is because they have become accustomed to the cost savings associated with not taking a video subscription, brought on by the tough economic times of the recent recession.  In general all the tools are in place for pay TV video subscriptions to make a resurgence, however, program costs continue to be the single greatest threat to growth.

Geography
USA
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