This is marketing research on the Cable TV industry and can include information on the background, market structure, definitions, competitors, trends and developments of cable TV and is related to other topics such as televisions, Digital TV, radio, media and entertainment.

Table of Contents

Table of Contents

1 Background 
2 Market Structure 
3 Industry Definitions 
4 Market Metrics 
5 Industry Players 
6 Trends and Recent Developments 
7 Sources

Background

The broadcast and pay television equipment sub-sector consists of equipment utilized by traditional over-the-air broadcasters and by cable system operators to transmit the same information and programming to many recipients, either through wireless technology or over fiber-optic and/or coaxial cable. Products under this classification include amplifiers; AM, FM, and television transmitters; broadcasting transmitting antennas; cable television head-end equipment, including modulators/demodulators and control units; subscriber converters and decoders and broadcast and studio equipment.

The cable television industry originated in the United States in the late 1940s as a means of transmitting over-the-air broadcast signals to communities out of the reach of then existing broadcast transmitters. Individual homes were wired with cable from a central antenna through which mostly local area broadcast signals were transmitted. These systems gradually evolved to transmitting distant signals, and cable operators began to compete against terrestrial broadcasters for viewers. The primary revenue source for cable system operators is subscription fees, with advertising revenue a secondary source.

Market Structure

The Cable TV industry relies on the following revenue flows:

• Advertising,
• Installation services,
• Basic cable subscriptions,
• Premium channel subscriptions

Periodically increased subscription rates as well as increases in advertising revenues will be the case in near future to boost revenues for the cable TV industry.

By number of subscribers, the U.S. cable television market is the second largest in the world, and cable penetration is high at approximately 68 percent of television households. According to Nielsen Media Research, there were approximately 68 million wired cable subscribers and 10,844 cable headends in the United States at the end of the 1990’s. The cable industry’s share of multi-channel video households has been declining slightly as a result of competition from other providers, especially direct broadcast satellites (DBS).

The top 20 multiple system operators (MSOs) serve approximately 90 percent of cable subscribers in the United States, indicating a high level of consolidation in the domestic cable industry. This allows operators to address declining levels of public funding and the challenges brought by newer competitors. In addition, operators can leverage the advantages of fiber optics, digital terrestrial compression, and transmission technologies to tap new consumer demands. In August 1999, the top five MSOs were AT&T, Time Warner Cable, Comcast, MediaOne, and TWE-Advance/Newhouse, as reported by Cablevision magazine. Other major MSOs include Cox Communications, Charter Communications, Adelphia Communications, Cablevision Systems, and Century Communications.

The number of establishments in the cable TV industry continues to expand as more regional players enter the market.

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Overall employment has likewise increased in the industry. The business now has a workforce of approximately 300,000.

Industry Definitions

Some key definitions for the industry are as follows:

• Head end Cable television - head end is a master facility, a center, for receiving television signals useful for processing and distribution over a cable television system. It is normally an unstaffed facility, surrounded by secure fencing and is typically a building or large shed housing electronic equipment used to receive and re-transmit video over the local cable infrastructure. Power substations also work as cable head ends.

• Subscribers - users who pay every month to cable companies for subscriptions to the TV channels. This method is similar to newspapers and magazines.

• Set top box - a device connected to the television which can convert incoming signals to content and display it on TV.

Market Metrics

U.S. Market

Revenues increases for the cable TV industry have been consistent. The operators expand offerings and pass along frequent price increases and have had little resistance from consumers thorugh 2007.

World Market

This year, the number of global cable TV subscribers will reach 347 million. New growth is likely to come from subscribers opting for digital services. After 2003, the rate of growth of subscribers globally experienced a decline. DTH also threatens the growth of subscribers as more people in developing economies adopt the DTH model.

The top countries in terms of cable TV subscribers remain China, the U.S., India and Germany. The first three of these countries account for 60% of worldwide cable TV households. Annually, most subscribers added are from Asia. In fact almost 60% growth comes from China and India. China’s cable TV subscribers passed 90 million in 2002. By end of 2008, world cable market revenues will reach US $178 billion.

Since 2004, cable industry has been showing recovery from sluggish growth. The conversion to digital cable TV may help growth. Worldwide, there are 44 million digital TV subscribers and the number is expected to grow to 108 million by 2009. Cable modems are another key source of revenues, totaling US $22 billion in revenue in 2005.

Industry Players

These are major players in this market, but it is not an exhaustive list of all key firms.

Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

Other key players in world of cable TV industry include the following:

• Cablevision

Revenues of US $6 billion in 2007 with a market capitalization of $10 billion. Lower profit margin than Comcast of 3.3%. Has 3.1 million video subscribers, placing it as the 5th largest cable TV operator in the United States.

• General Electric Co. (NBC)

One of the world's largest corporations, Connecticut-based General Electric Co. is the owner of the National Broadcasting Company Inc. It owns more then 29 stations of its own and has about 230 affiliates. The company accounted for 8.5 percent of its parents' 2004 revenues of USD 151.3 billion.

• Walt Disney Company (ABC Television Network)

It is the second largest media company and owns the ABC television network, the ABC television station groups, radio station and network operations, and has majority ownership of the ESPN cable station. It has about 226 affiliates also.

• The News Corporation Ltd. (Fox Broadcasting)

An Australia-based company, owned by Rupert Murdoch and one of the world's largest media conglomerates. Had revenues of US $24 billion in 2005.

Trends and Recent Developments

The cable industry in the United States appeared moribund through much of the 1980s but turned around in the 1990s. The turning point in the industry’s fortunes was Microsoft’s $1 billion investment in Comcast, after which the idea of cable infrastructure as the most logical broadband route into U.S. households and onto the Internet gained life. The industry entered a period, still ongoing, of rapid and extensive system build-outs, overbuilds, and upgrades.

The two most significant factors currently affecting the broadcasting and cable television equipment sector in the United States are the transition to digital transmission technologies and the changing competitive landscape created by the 1996 Telecommunications Act. Investments in the cable sector in recent years to implement digital compression technology and upgrade infrastructure have placed cable networks at the core of developing voice, data, and video networks. These improvements also have placed operators in a strong competitive position as they prepare for competition from telephone companies, DBS, and the Internet. Digital compression and fiber-optic technologies allow operators to build capacity, attract more subscribers, increase revenue per subscriber, and therefore better compete against alternative providers (primarily DBS, which recently has slowed the cable industry’s subscriber growth). For instance, cable operators currently rely largely on coaxial cable to carry services to subscribers. Hybrid fiber-coaxial cable is utilized increasingly in system upgrades and network expansions to provide greater capacity, speed, and quality of signal transmission; greater reliability; reduced expenses; and two-way transmission, allowing additional revenue-producing service offerings to subscribers.

Approximately half of all cable plant in the United States was expected to be two-way-capable by the year 2000. Some of the major operators will have spent upward of $1 million each in 1999 on capital expenditures and will have 100 percent of their systems two-way-capable by the end of the year 2000. Time Warner, MediaOne, Comcast, Cox, and Cablevision Systems are the leaders in offering two-way services to their subscribers. Analysts report that in the late ‘90s the U.S. cable industry spent approximately $8 billion annually for infrastructure construction and upgrades.

The most recent development is that of DTH or Direct to Home TV. Consumers purchase a small dish and watch cable TV through signals received from satellites and pay only for the channels they watch. Recent developments in this technology have forced traditional cable companies to rethink their business models.

Sources

• Most current US government sources
• Company websites