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Standalone Pay TV Service ARPU Declined 10% From 2016-2018: Research Company

The average revenue per user for standalone pay TV service in the U.S. declined 9.5% from 2016-2018, from $84 to 76, according to a new Parks Associates report.

By “standalone,” it appears the research firm is reporting on pay TV services not bundled with high-speed internet and phone service. This would mean that the proliferation of inexpensive, live-streamed skinny bundles (aka “vMVPDs”) factored heavily into the decline.

"Traditional pay TV providers (MVPDs) have faced continued subscriber losses due to increasing consumer choice from OTT services, so they are deploying skinny bundles and vMVPD services to create more choice among viewers," said Elizabeth Parks, president of Parks Associates. "For pay TV service providers, traditional and online, they are exploring new areas in content ownership and development, and to be successful in these efforts, understanding consumer activity and motivation related to adoption and use of their services is critical.”

Notably, during Charter Communications’ second-quarter earnings call earlier this week, company executives noted the downward price pressure being enabled by the company’s lower cost IP-delivered video products, notably Spectrum Stream.

Meanwhile, among other tidbits broken out from Parks’ report, “360 View: Entertainment Services in the U.S.,” the research firm noted that the self-reported amount consumers spent on video entertainment outside of pay TV declined 30% from 2014-2018, dropping from a peak of $40 a month to just over $20 at the end of 2018. Not only did spending on DVD and Blu-ray crater, but outlay for movie theater tickets dropped 50%, parks said.

The only variable to hold steady was money spent on video delivered over the internet, which has held at $8-$9 a month since 2014.

"Subscription online video is the only growth category for consumer-paid video entertainment beyond pay TV. Operators, struggling with declining ARPU for standalone pay-TV services, are anxious to leverage this trend," said Brett Sappington, senior research director and principal analyst at Parks Associates. "Operators are taking differing approaches. Some, including Comcast and Dish, are offering subscriptions to third-party OTT video services and are integrating them into their discovery interfaces. Partnering gives operators a chance to serve as content aggregator, a familiar position. Others, including AT&T and Dish, are expanding their competitive reach online and have introduced vMVPD services."

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!