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Cable Companies Seek New Revenue Models

Cable Operators in Search of Billions from Alternative Services, Says ABI Research

Cable network operators are increasingly seeking alternative revenue streams to supplement their income from residential video services. Four additions offer the greatest promise: voice telephony, broadband data services, SMB and cellular backhaul, and advertising. While these play a supporting role in the overall cable revenue mix today, their importance will grow strongly with time.

“ABI Research expects that in 2007, residential video will account for about $170 billion in revenue worldwide,” says vice president and research director Stan Schatt. “Voice, data, SMB/cellular backhaul, and advertising add a further $92 billion. However in 2012, the end of our current forecast period, those figures will be about $268 billion and $279 billion respectively, showing the increasing importance of these alternative services. Advertising revenues alone will grow from $40 billion this year to $194 billion in 2012.”

This shift in emphasis is taking place for different reasons in different regions.

In North America, the motivation stems from video market saturation: subscriber numbers will show only small growth, or perhaps even losses to telco and satellite competition. So alternative revenue streams are seen as essential.

In Asia, there is still room for growth in the subscriber base, but even there, operators are starting to realize the importance of advertising and other alternative services, and their revenue potential.

These trends affect and are affected by technologies as well. Cable operators in North America and some other markets are starting to equip their core networks with Ethernet so that they can support business services more easily.

“The rise of advertising as a revenue alternative will produce a profound change in how things are advertised,” adds Schatt. “This will have an impact on technologies as well as revenues, and even in the way that advertising agencies construct ad campaigns, which will feature more interactivity.”

ABI Research’s report Cable Television Infrastructure: Headend, Plant, Spectrum, Backhaul, STB, and Revenue Analysis includes an assessment of revenue development across video, voice, data, and business services, and addresses emerging business issues such as regulatory implications, demand for new services, competition from satellite and telecom players, and the role of advertising. Also included in the report is an overview of operator-vendor relationships.

It forms part of the company’s Multi-Channel Video Research Service which also includes other Research Reports, Research Briefs, Market Data, Online Databases, ABI Vendor Matrices, ABI Insights, and analyst inquiry support.

Founded in 1990 and headquartered in New York, ABI Research maintains global operations supporting annual research programs, intelligence services and market reports in broadband and multimedia, RFID & contactless, M2M, wireless connectivity, mobile wireless, transportation, and emerging technologies. For information visit http://www.abiresearch.com, or call +1.516.624.2500.

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