Alpine Communications Blog

By Jon Hemingway -- Broadcasting & Cable, 6/21/2007 9:25:00 AM

The U.S. TV distribution business will grow 5.4% to $123.3 billion by 2011, according to a new study released Thursday by PricewaterhouseCoopers, led by subscription TV, with ad-supported local TV basically flat over the same period.

The study breaks out the U.S. market into end-user spending, which is both subscription--basic and premium--and non-subscription services--pay per view and video on demand--and ad spending. The former is projected to rise at a 7.1% compound annual rate to $88.6 billion in 2011 and the latter at just a 1.7% rate to $34.7 billion.

The most significant surge in end-user spending will come from video-on-demand segment, though it will remain a relatives small piece of the pie. The VOD market is projected to increase by a 19.5% compound annual growth rate to $4.2 billion in 2011, dwarfing pay-per-view growth rate of 4.4% over the same period.

While the market size of the latter was $1 billion larger in 2006, PWC expects VOD’s total market size to surpass pay-per-view in 2010 at $3.7 billion versus $3.2 billion, respectively.

Within the VOD market, cable will continue to be the dominant player, growing at a 14.1% rate, but it will lose some market share as telephone companies roll out their expanded networks. According to the data, telco growth in the segment will be 62.7% over the study period and will claim a quarter of total VOD spending in 2011.

PWC forecasts only a 1% increase in TV station ad spending to $27.5 billion in 2011, but multi-channel video providers can expect a healthier 4.5% rise to $7.2 billion.

The overall growth rate in the TV station segment is being held back by an expected -0.3% decline in national spot, while local advertising over the period will rise by 2%.

Political campaigns will continue to provide spikes in TV ad spending, especially in presidential election years and PWC expects the multi-channel sector will continue to be buoyed by local ad dollars.

The study, which charts the growth trajectory of domestic and international television distribution, is part of the firm’s “Global Entertainment and Media Outlook: 2007-2011.”

PWC’s forecasting for this study was a combination of quantitative modeling and professional analysis. PWC draws its conclusions by examining factors in recent trends and building models that will quantify their impact. The factors include economic, demographic, technological, institutional, behavioral and competitive.