The Future of Satellite TV: How Starlink Changes the Game

This article will be updated as new information becomes available.

Satellite Television

Satellite television, also referred to as Satellite TV, is a type of broadcast delivery system which uses communication satellites to transmit television programming directly to the viewers’ homes. This is different from traditional terrestrial television, where signals are broadcast over the airwaves and received by an antenna, or cable television, where programming is delivered via physical coaxial or fiber-optic cables.

Here’s a simple explanation of how satellite television works:

1. Program Origination: Television programming can come from a variety of sources, such as network affiliates, independent broadcasters, satellite broadcasters, or cable channels. This content is then sent to a broadcast center.
2. Uplink: At the broadcast center, the TV programs are encoded and compressed into a digital format, then uplinked or sent up to a satellite in space.
3. Satellite: The satellite receives the signals, amplifies them, and then rebroadcasts them back to Earth.
4. Downlink and Reception: The signals are picked up by a satellite dish at the viewer’s location. The dish focuses the signals onto the feedhorn, which passes them onto the satellite receiver.
5. Decoding and Viewing: The satellite receiver, often a set-top box, decodes the digital signals, converting them into a format that can be displayed on the television screen.

Satellite television can by delivered in high-definition (HD) and 4K quality. However, it’s important to note that the quality of the broadcast can be affected by weather conditions, as heavy rain or snow can disrupt the signal.

Satellite television requires specific hardware, including a satellite dish and a receiver box. The dish must be pointed in a specific direction, towards the particular satellite broadcasting the channels. Multiple satellites may be required for different packages of channels.

Satellites Used for Broadcast Television

The satellites used for satellite television are typically geostationary satellites. These satellites orbit the Earth at the same speed as the Earth’s rotation, which allows them to stay in a fixed position relative to the Earth’s surface.

The geostationary orbit is approximately 35,786 kilometers (22,236 miles) above the Earth’s equator. At this altitude, a satellite takes 24 hours to orbit the Earth, matching the Earth’s rotational period. This means that from a point on the Earth’s surface, the satellite appears to stay in the same spot in the sky, making it ideal for broadcast applications like satellite television.

These satellites carry transponders, which are devices that receive signals from an Earth station and then retransmit those signals back to Earth. Each satellite can carry a number of transponders, and each transponder can carry multiple television channels.

The satellites are designed to last for many years – typically 10 to 15 years or more – but eventually, they run out of the fuel used to keep them in the correct orbit and have to be replaced.

Terminology

Here are some commonly used acronyms relevant to this article:

• VOD (Video On Demand): A system where users can select and watch video content whenever they choose, rather than at a scheduled broadcast time. Examples include services like Netflix and Amazon Prime Video.
• SVOD (Subscription Video On Demand): A service offering unlimited access to a wide range of programs for a monthly flat rate. The user has control over the content, being able to watch whatever they choose at any time. Examples include Netflix, Amazon Prime Video, and Disney+.
• TVOD (Transactional Video On Demand): Users pay for each piece of content. This is common for services where you rent or buy digital copies of movies or TV shows, like Amazon Video or iTunes.
• AVOD (Advertising-based Video On Demand): These services provide free content to users, but are typically ad-supported. Examples include YouTube, Pluto TV, and Tubi.
• OTT (Over The Top): This refers to content providers that distribute streaming media as a standalone product directly to viewers over the Internet, bypassing traditional broadcast television platforms that traditionally act as a controller or distributor of such content. Examples include Netflix, Disney+, and Prime Video.
• DTC (Direct-to-Consumer): This refers to the distribution of content directly from the producer to the consumer, bypassing traditional distribution channels. This term is often used to describe services like Disney+ or HBO Max, which are owned by content producers and deliver content directly to consumers.
• IPTV (Internet Protocol Television): This is a system where digital television service is delivered to the subscriber through Internet protocol technology via the medium of broadband or internet connection.
• MVPD (Multichannel Video Programming Distributor): This term refers to services that provide multiple television channels, such as cable and satellite television services.
• vMVPD (virtual Multichannel Video Programming Distributor): These are services that provide multiple television channels over the internet without supplying their own data transport infrastructure (cable, satellite, etc). Examples include Sling TV, YouTube TV, and Hulu Live TV.
• Pay TV: This generally refers to the following services: cable TV, satellite TV, and IPTV.

These are some of the most common terms, but there are many others, particularly as new technologies and services continue to evolve in this space.

Taxonomy of Satellite TV Ecosystem

Satellite TV relies upon an ecosystem of companies, each with their own specialty, and role, related to the successful delivery of the service. The taxonomy of the major stakeholders is provided below:

• Content Creators/Producers: Companies or individuals, such as HBO or BBC Studios, create television shows, movies, news broadcasts, and other types of programming. They make money by selling or licensing their content to broadcasters or distributors. Sometimes they generate revenue through product placements or sponsorships within the content.
• Broadcasters: Networks like CBS, NBC, or ESPN take the content and broadcast it to viewers. Broadcasters generate revenue through advertising and, in the case of subscription networks, subscriber fees. Some networks also earn syndication fees by licensing their content to other networks domestically or internationally.
• Content Distributors: These include traditional cable TV companies like Comcast, satellite TV companies like DISH Network, and online streaming services like Netflix. They distribute content from broadcasters to viewers and earn money primarily through subscriber fees, and sometimes through advertising revenue (particularly for ad-supported streaming services).
• Satellite Operators/Service Providers: Companies like SES or Intelsat operate satellites and provide related services to broadcasters and content distributors. They earn money by leasing satellite capacity and providing associated services like uplinking and downlinking.
• Multichannel Video Programming Distributors (MVPDs): These include cable companies like Charter Communications, satellite companies like DirecTV, and telecommunications companies like Verizon FiOS. They provide multiple television channels to consumers and generate revenue through subscriber fees and sometimes advertising.
• Satellite Television/Direct-to-Home (DTH) Providers: These are companies like DISH Network or DirecTV that provide satellite television services directly to the consumer’s home. They make money through subscription fees and equipment rental fees.
• Internet Service Providers (ISPs): Companies like AT&T, Comcast, or Verizon provide internet service, which is used to distribute video content through over-the-top (OTT) services. They generate revenue through subscription fees for their internet services.
• Over-the-Top (OTT) Services: These companies distribute television content over the internet, bypassing traditional distribution channels. Examples include Netflix, Amazon Prime Video, and Disney+. They make money through subscription fees.
• Telecommunications Service Providers: Companies like AT&T, Verizon, or T-Mobile provide a range of communication services, including telephone, internet, and television. They generate revenue through a variety of sources, including subscription fees, equipment sales, and advertising.

Examples of Ecosystem Companies

SES

SES, as a Satellite Operator/Service Provider makes money by leasing capacity on their satellites and providing related services to Broadcasters, Content Providers, and other customers. Here’s a general overview of revenue sources:

• Leasing Satellite Capacity: SES owns and operates a large number of satellites. Each satellite has a certain amount of “transponder” capacity, which can be thought of as the amount of data it can transmit and receive. SES leases this capacity to broadcasters and content providers, who use it to distribute their programming to cable systems, direct-to-home satellite services, and other distribution platforms.
• Service Contracts: In addition to leasing satellite capacity, SES also provides a range of other services to its customers. These can include things like uplinking (the process of sending a signal from the ground to the satellite), downlinking (receiving a signal from the satellite and transmitting it to the end user), encryption, and signal compression. These services are typically provided under contract, and SES would be paid a fee for these services.
• Managed Services: For some customers, SES may provide a complete end-to-end solution. This could include everything from the initial production and encoding of content to its distribution to end users. These types of services are typically more complex and would command higher fees.
• Occasional Use and Special Events: SES also provides services for occasional use, such as live broadcasting of special events like sports, news, or concerts. These customers typically pay for the specific time they use on the satellite.

The exact details of SES’s contracts with its customers are typically confidential, and the pricing can vary depending on a range of factors including the specific services provided, the amount of capacity leased, the duration of the contract, and the geographic regions covered.

DISH Network

DISH Network is a company that fits into several categories in the context of the definitions provided.

• Satellite Television/DTH Provider: DISH Network provides satellite television services directly to consumers’ homes. In this role, it competes with other providers of television services, including cable TV providers, other satellite TV providers, and increasingly, online streaming services.
• Multichannel Video Programming Distributor (MVPD): DISH Network is also considered a Multichannel Video Programming Distributor (MVPD). This term is used to describe companies that provide multiple television channels to consumers, including cable companies, satellite TV companies like DISH, and some digital platforms.
• Content Provider: In some contexts, DISH could also be considered a content provider. For example, DISH offers some exclusive channels and content to its subscribers, and it also owns Sling TV, a streaming service that provides a mix of live and on-demand content.
• Telecommunications Service Provider: More broadly, DISH Network can be classified as a telecommunications service provider, as it provides a range of communication and entertainment services to consumers.

In the context of a relationship with a satellite service provider like SES, DISH Network would typically be the customer or client. They would contract with SES or a similar company to use their satellite capacity to distribute their television services to their own customers.

Alternatives to Satellite Television

Broadcast Television

Broadcast television, also known as terrestrial television, is a type of television broadcasting in which the television signal is transmitted by radio waves from the terrestrial (Earth-based) transmitter of a television station to a TV receiver having an antenna.

Here’s a simple breakdown of how it works:

1. Content Creation: Television programming is created. This could be live television, a news broadcast, pre-recorded programming, a television show, movie, etc.
2. Transmission: The television station sends the programming over the airwaves. This is done using a large transmission antenna which sends the signal out to the surrounding area. The signal is sent as a radio wave, which is a type of electromagnetic radiation.
3. Reception: Viewers receive the broadcast signal on their television sets using a television antenna. This could be a large rooftop antenna, a smaller indoor antenna, or an antenna built into the television set itself.
4. Decoding and Viewing: The television set decodes the broadcast signal and displays the programming on the screen.

Broadcast television was the original method of television broadcasting, and it is still used today, although its popularity has been surpassed by cable, satellite, and internet television in many areas. One of the main advantages of broadcast television is that it can be received for free with a suitable antenna, whereas cable and satellite television require paid subscriptions. However, the range of channels and programming is often more limited compared to other delivery methods, and the signal quality can be affected by many factors, including the distance from the transmitter, local terrain, and weather conditions.

Many countries have switched from analog to digital broadcasting, which provides better picture and sound quality, and allows for additional features like electronic program guides and additional channels.

Traditional Cable Television

Traditional cable television is a system of delivering television programming to consumers via radio frequency signals transmitted through coaxial cables or, in more recent systems, light pulses through fiber-optic cables. This contrasts with broadcast television (also known as terrestrial television), in which the television signal is transmitted over the air by radio waves and received by a television antenna attached to the television.

Here’s a simple outline of how traditional cable television works:

1. Source: TV programming can come from a variety of sources, such as network affiliates, independent broadcasters, or cable networks.
2. Headend: These signals are sent to a central location, known as the cable system headend. At the headend, the signals are processed and sent out over the cable network.
3. Distribution: The processed signals are then sent out over the cable system’s network of cables to individual homes. The signals are typically sent over coaxial cables, although some modern systems use fiber-optic cables.
4. Reception: At the consumer’s home, the signals are received by a cable box, which decodes the signals and sends them to the television set. The cable box allows the user to select which channel to watch and provides features like on-demand programming and digital recording.

Cable television offers a wide variety of programming, including local network affiliates, national networks, specialized cable networks, and premium channels that offer movies and original programming. Some cable systems also offer internet and telephone service in addition to television service, often bundled together in a single package.

Traditional cable television is facing competition from satellite television, IPTV, and OTT streaming services, which deliver television programming over the internet.

IPTV

IPTV is a digital television broadcasting system that delivers television content over the Internet. Unlike traditional cable or satellite systems, IPTV uses the internet protocol to deliver television programs “on demand,” which is what makes it different from the traditional broadcasting methods.

Here’s a simplified breakdown of how IPTV works:

1. Content Creation: Like other forms of television, IPTV starts with the creation of content. This could be live television broadcasts, pre-recorded television shows, movies, or other video content.
2. Content Conversion: The video content is converted into a digital format that can be transmitted over the internet using the Internet Protocol (IP). This involves compressing the video files and splitting them into packets that can be sent over the network.
3. Transmission: The digital content is transmitted over the internet from the content provider’s servers to the viewer’s internet service provider (ISP). This can be done using a variety of different protocols and technologies, depending on the specifics of the IPTV system.
4. Reception: The viewer’s IPTV device (which could be a set-top box, smart TV, or other device) receives the digital content over the viewer’s internet connection. The device decodes the digital content and converts it back into a form that can be displayed on the television screen.
5. Viewing: The viewer watches the IPTV content on their television screen. Depending on the specifics of the IPTV system, the viewer may be able to pause, rewind, or fast-forward the content, or they may be able to select what they want to watch from an on-demand library.

One of the key aspects of IPTV is that it uses the same basic protocols as the internet to transmit video content. This allows for a lot of flexibility and enables features that are not possible with traditional broadcast, cable, or satellite TV. For example, IPTV can provide video on demand, time-shifted television, and more interactive services.

However, because IPTV relies on the internet, the quality of the viewing experience can be affected by the speed and reliability of the viewer’s internet connection. A slow or unreliable connection can result in buffering, lag, or other issues.

IPTV is typically distributed by a service provider and can be free or subscription-based. There’s often a large variety of shows and content that can be accessed at any time, which makes it a popular choice for users.

Here’s a brief overview of what IPTV is used for:

• Video on Demand (VOD): IPTV technology allows users to select and view video content at their convenience, which is a significant shift from traditional broadcast and cable television systems that rely on scheduled programming.
• Live Television and Live Media: With IPTV, users can watch live broadcasts just like they would on traditional television, but the distribution is done over IP networks. Some IPTV services also include live media, which could involve broadcasts of live shows, concerts, or events.
• Time-Shifted Media: Some IPTV services offer “time-shifted” viewing, which means users can watch broadcast television shows at a time that is convenient for them. This is different from VOD in that the content has a limited availability (for example, shows might be available for a week after their original broadcast).
• TV on Demand (TVoD): Some services offer TVoD, which is similar to VoD but specifically for television shows. Users can access series or individual episodes at their convenience.

The flexibility and convenience of IPTV are significant advantages over traditional television broadcasting methods. The ability to access content at any time, and on various devices such as TVs, tablets, or smartphones, is a significant draw for many consumers.

Streaming/OTT

Streaming services, also known as OTT services, deliver video and/or audio content directly to users over the internet. This is a departure from traditional methods of content delivery such as terrestrial broadcast, cable, or satellite TV.

Streaming services have become a popular way for consumers to access a wide range of content, including movies, TV shows, live events, and music. They often provide a more flexible viewing experience compared to traditional methods, allowing users to watch content on-demand, at any time, and on a variety of devices, including smart TVs, computers, tablets, and smartphones.

Here’s a simplified breakdown of how streaming services work:

1. Content Creation: This is the first step where movies, TV shows, music, or other types of content are produced and prepared for distribution. This content can be original (produced by the streaming service itself, like Netflix Originals) or licensed from other content creators.
2. Content Storage: Once the content is ready for distribution, it’s stored on servers. These servers are often distributed globally to allow for faster delivery of content to users around the world. This global network of servers is often referred to as a Content Delivery Network (CDN).
3. User Request: When you, as a user, select a movie or a show to watch on your device, the streaming service receives a request to view that content.
4. Content Delivery: The requested content is then delivered over the internet from the server to your device. The content is usually sent in small chunks, so you can start watching before the entire file has been downloaded. This is what allows for streaming—watching the content as it arrives, rather than waiting for a complete download.
5. Decoding and Playback: The streaming content is received by your device and decoded by the appropriate software (like a media player or the streaming service’s app), which then plays back the content on your screen. The software also manages the continuous flow of data, buffering content as necessary to ensure smooth playback.
6. Adaptation: Many streaming services use adaptive streaming technologies. This means that they can adjust the quality of the content you’re streaming in real-time, based on the current network conditions. If your internet connection slows down, the service might switch to a lower quality to prevent buffering; if your connection improves, it can switch back to higher quality.

It’s important to note that while the content is streamed over the public internet, the specific technologies and infrastructure used can vary between different streaming services. However, the basic process of storing content on servers and streaming it to users on-demand is generally consistent across different services.

Some of the most well-known streaming services include:

• Netflix: Known for its wide array of movies, TV shows, documentaries, and original programming.
• Amazon Prime Video: Offers a mix of movies, TV shows, and original content. Access to Prime Video is included with an Amazon Prime subscription, which also provides benefits for shopping on Amazon.
• Hulu: Provides a mix of TV shows, movies, and original content. Hulu also offers a Live TV option, which includes live sports, news, and entertainment programming.
• Disney+: Offers content from Disney, Pixar, Marvel, Star Wars, and National Geographic, including movies, TV series, and original programming.
• HBO Max: Includes content from HBO along with a range of movies, TV shows, and original programming from WarnerMedia.
• Apple TV+: Offers a growing selection of original programming.

These services typically require a paid subscription, although the business model can vary. Some services, like Netflix, offer an ad-free experience as part of the subscription, while others, like Hulu, offer a lower-cost subscription that includes ads, with an ad-free experience available for a higher price.

Another type of streaming service is live TV streaming services, such as YouTube TV, Hulu Live, and Sling TV. These services stream live TV over the internet, providing an alternative to traditional cable or satellite TV subscriptions.

Streaming services continue to grow in popularity as more and more consumers “cut the cord” and move away from traditional cable, IPTV and satellite TV.

Streaming versus IPTV

Streaming services and IPTV services both deliver video and audio content over the Internet, but they do so in different ways and offer different features. Here are some key differences:

• Delivery Network: IPTV services are often provided by telecom operators over a managed network, which can provide a guaranteed level of quality and service. These services are typically delivered through a dedicated, managed network separate from the public Internet. On the other hand, streaming services like Netflix or Hulu, are delivered over the public Internet.
• Access and Equipment: IPTV often requires a subscription to a specific internet service provider (ISP) or telecom, and you may need special equipment (like an IPTV set-top box). In contrast, streaming services can be accessed on any device with an internet connection and the necessary app or web browser, regardless of the ISP.
• Content Delivery: IPTV services often include features similar to traditional TV, such as live television, time-shifted television (watching previously aired shows), and they may offer packages of channels. OTT streaming services typically focus on on-demand content, allowing users to choose what they watch and when. Some OTT platforms do offer live streaming as well, but their mainstay is usually on-demand content.
• Business Model: IPTV is typically a subscription-based service where users pay a monthly fee to access a bundle of channels or services. Streaming services, on the other hand, can operate under a wider range of business models, including subscription (SVOD, like Netflix), transactional (TVOD, like iTunes), or ad-supported (AVOD, like YouTube).
• Regulation: IPTV services often have to follow the same regulations as traditional cable or satellite TV providers, which may include rules about the content they can offer and how it’s packaged. Streaming services have traditionally been less regulated, although this is subject to change.

So, while both IPTV and OTT services like Netflix use the internet to deliver video content, they do so in slightly different ways and they offer different features and services.

It’s important to note that the lines between IPTV and OTT services are becoming increasingly blurred as technology and market demands evolve. Many services now offer a mix of live, on-demand, and recorded content, accessible on a wide range of devices.

Low Earth Orbit (LEO) Broadband Satellites

Low Earth Orbit (LEO) satellites have been a significant development in the world of satellite communications. Unlike geostationary satellites, which stay fixed over one spot on the Earth, LEO satellites orbit much closer to the Earth and move relative to the surface. Furthermore, they are typically used in constellations of many satellites that can provide global coverage. Here’s how the introduction of LEO satellites could affect satellite television:

• Improved Latency: LEO satellites are much closer to the Earth than geostationary satellites, which can significantly reduce signal latency. This could improve the viewing experience for live events and interactive services.
• Increased Capacity: Because LEO systems use many satellites, they can offer more capacity than a single geostationary satellite. This could allow for more channels or higher quality broadcasts.
• Global Coverage: LEO satellite constellations can provide coverage for the entire Earth, including remote and underserved areas. This could make IPTV and streaming services an option for satellite broadband subscribers.
• Smaller Antennas: The stronger signal provided by the closer LEO satellites could allow for smaller receiving antennas. This could make satellite TV equipment less obtrusive and easier to install.

However, there are also challenges with using LEO satellites for TV broadcasts:

• Satellite Tracking: Because LEO satellites move relative to the Earth’s surface, the receiving dish would need to be able to track the satellite as it moves across the sky or switch between multiple satellites in view. This requires more complex and potentially more expensive equipment than a fixed dish for geostationary satellites.
• Spectrum Management: Managing the frequencies used by a large number of satellites to avoid interference can be challenging.
• Launch and Replacement Costs: Launching a large number of satellites is expensive, and because LEO satellites have shorter lifetimes than geostationary satellites, they need to be replaced more often.

Most satellite TV providers still use geostationary satellites, but the industry is exploring the possibilities offered by LEO satellites.

SpaceX Starlink

Starlink is the current leader in providing LEO broadband data services.

Starlink, the satellite Internet service being constructed by SpaceX, is a broadband Internet connection that can support a variety of online activities, including streaming video. Therefore, in principle, it should be able to support IPTV and streaming services.

IPTV and streaming services require a stable and reasonably fast internet connection to work well, especially for high-definition or 4K content. Starlink aims to provide broadband speeds comparable to those of terrestrial ISPs, which would be more than sufficient for IPTV and streaming services.

However, it’s important to note a few potential caveats:

• Data Caps: Starlink currently does not have data caps. However, streaming video, especially at high quality, can consume a large amount of data. If Starlink were to implement data caps in the future, this could limit the feasibility of using it for IPTV or streaming, depending on the specifics of the data plan.
• Latency: While Starlink is designed to have lower latency than traditional satellite internet due to its use of low-Earth-orbit satellites, some delay could still occur. However, this latency is generally not an issue for video streaming, as the content can be buffered in advance.
• Availability: Starlink is still in the process of deploying its satellite network and it is not available everywhere. Availability would depend on prospective customer’s location and the status of Starlink’s deployment.
• Service Interruptions: Starlink can potentially be affected by weather conditions and other factors that might cause temporary service interruptions. These could potentially disrupt viewing.

Market Status and Forecast

Global Pay TV Market

The scope of the Pay TV market includes: cable TV, satellite TV, and IPTV.

Cord-Cutting

An increasing number on people are leaving Pay TV and transitioning to use broadband and streaming services. This trend is referred to as cord-cutting.

“Cord-cutting” is a term that emerged during the late 2000s and early 2010s, referring to the process of cancelling traditional Pay TV subscriptions, such as cable or satellite services, in favor of using internet-based services for video content. These internet-based alternatives can include both subscription services like Netflix, Hulu, and Amazon Prime, and free or ad-supported services like YouTube or Tubi.

The cord-cutting trend has been driven by a number of factors:

• Cost savings: Traditional cable or satellite TV packages can be quite expensive, often including many channels that the subscriber doesn’t watch. By contrast, many internet-based services offer “à la carte” pricing, where users can pay for just the content they want. This often results in significant cost savings.
• Flexibility: Internet-based services typically offer more flexibility than traditional pay-TV. Users can watch content whenever they want, rather than having to adhere to a broadcast schedule, and can often download content to watch offline. In addition, users can typically access these services on a variety of devices, including TVs, computers, tablets, and smartphones.
• Increased availability of content: Over the past decade, the amount of high-quality content available through internet-based services has grown dramatically. This includes both original content produced by the services themselves (like Netflix’s “Stranger Things” or Amazon’s “The Marvelous Mrs. Maisel”), and content from traditional networks and studios.

However, cord-cutting is not without its challenges. It typically requires a reliable, high-speed internet connection, which may not be available in all areas. In addition, while many shows and movies are available on internet-based services, there can still be gaps in availability, particularly for live programming like sports and news. Some services have addressed this by offering live TV packages (like YouTube TV or Hulu Live), but these tend to be more expensive than their on-demand counterparts.

In addition, as more and more services enter the market, each with their own exclusive content, some users have found that they need to subscribe to multiple services to get all the content they want, which can reduce the cost savings of cord-cutting.

Overall, though, cord-cutting has proven to be an increasingly popular choice for consumers, offering a more personalized and often cheaper way to consume video content. As internet speeds continue to increase and the amount of available content continues to grow, it’s likely that this trend will continue.

Consumer Market Shift Underway

This market information is sourced from PEW Research Center.

Cable and satellite TV use has dropped dramatically in the U.S. since 2015

PEW Research Center, March 2021

The share of Americans who say they watch television via cable or satellite has plunged from 76% in 2015 to 56% this year, according to a new Pew Research Center survey of U.S. adults. Some 71% of those who do not use cable or satellite services say it’s because they can access the content they want online, while 69% say the cost of cable and satellite services is too high and 45% say they do not often watch TV.

The drop in cable and satellite subscribers highlights the changing landscape of connectivity and media in an era of “cord cutting,” particularly as internet streaming services like Netflix and Hulu have grown in popularity, especially during the COVID-19 pandemic.

Streaming Market

This market information is sourced from Statista.

The streaming market is defined as the following: Subscription-based Video-on-Demand services (Subscription-VoD or SoD), e.g. Netflix and Amazon Prime Video, offer unlimited access to their content libraries for a monthly subscription fee. Movies and TV series can be streamed to various supported connected devices. The SVoD market does not include ad-supported services, pay-per-view offerings or services that require a Pay TV subscription (e.g. HBO Go).

Highlights of the global market include:

• Revenue in the Video Streaming (SoD) market is projected to reach US$95.35bn in 2023.
• Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 9.48%, resulting in a projected market volume of US$137.00bn by 2027.
• In global comparison, most revenue will be generated in the United States (US$39,250.00m in 2023).
• The average revenue per user (ARPU) in the Video Streaming (SoD) market is projected to amount to US$73.55 in 2023.
• In the Video Streaming (SoD) market, the number of users is expected to amount to 1.64bn users by 2027.
• User penetration will be 16.9% in 2023 and is expected to hit 20.6% by 2027.

Cord-Cutting Has Profound Impact on Service Providers

Cord-cutting has had a profound impact on DTH Providers. such as DISH Network and DirecTV:

• Subscriber Loss: The most direct impact of cord-cutting is the loss of subscribers. In the second quarter of 2020 alone, AT&T, which owns DirecTV, reported a loss of 886,000 Pay TV subscribers, many of whom were likely cord-cutters. DISH Network also saw a significant drop in satellite subscribers, losing around 96,000 in Q3 of 2021.
• Reduced Revenue: With the loss of subscribers comes a decrease in revenue. Traditional TV service providers make money not just from subscriber fees, but also from advertising. As viewership decreases, so does the value of advertising slots, which can result in decreased ad revenue.
• Changes in Business Strategy: To cope with these challenges, many satellite TV operators have made significant changes to their business strategies. For example, DISH Network has moved into the wireless sector with the acquisition of Boost Mobile in 2020. Similarly, AT&T spun off DirecTV into a separate entity in 2021, suggesting a shift in focus away from satellite TV.
• Introduction of Streaming Services: Recognizing the trend towards internet-based viewing, many traditional TV providers have introduced their own streaming services. DirecTV launched DirecTV Now (later rebranded as AT&T TV and then DirecTV Stream), a streaming service that offers a variety of live TV packages without the need for a satellite dish. DISH Network has a similar service called Sling TV. These services are aimed at attracting cord-cutters who still want access to live TV but prefer the flexibility and often lower cost of a streaming service.
• Negotiating Power with Content Providers: As their subscriber base shrinks, traditional TV providers may find themselves with less leverage when negotiating carriage fees with content providers. This could potentially lead to higher costs, further squeezing their profit margins.

Satellite Operator/Service Providers are also feeling the impact of cord-cutting on their video revenue:

• SES: 2022 sales in SES’s video business, which distributes TV channels such as Sky, Canalt and BBC, dropped 5.5% year-on-year.
• EUTEL: The company reported in their H1 FY23 Investor Report that “The video market … is structurally in decline,” Berneke said, adding the company planned to focus on areas such as mobile connectivity, supported by the merger with Britain’s OneWeb that is expected to close in the second or third quarter of 2023. Eutelsat’s core profit was 419 million euros ($445.61 million) in the first half of its fiscal year, missing company-provided estimates of 426 million euros. The broadcasting unit’s like-for-like sales dropped 6.7% to 338.5 million.

Cord-cutting has posed significant challenges for satellite TV ecosystem companies, forcing them to rethink their business models and find new ways to attract and retain customers. This trend is likely to continue as more and more viewers switch to internet-based services for their video content needs.

“Structural Decline”

When a market is described as being in “structural decline,” it means that the market is shrinking or contracting over a sustained period due to fundamental, long-term changes in its environment, rather than short-term or cyclical factors.

Several underlying factors can contribute to a structural decline:

• Technological Changes: Advancements in technology can make certain products or services obsolete. For example, the market for DVD players has been in structural decline due to the rise of streaming services like Netflix.
• Changes in Consumer Behavior: Shifts in consumer preferences and behaviors can lead to a structural decline in certain markets. An example would be the decline in demand for fossil fuel vehicles as more consumers opt for electric cars.
• Regulatory Changes: Changes in laws and regulations can impact market conditions. For instance, stricter environmental regulations have led to a decline in some heavy pollution industries.
• Demographic Changes: Shifts in population demographics can lead to structural market declines. An aging population, for example, might lead to a decline in markets for certain types of consumer goods.
• Economic Changes: Larger economic factors can also lead to structural decline. For instance, markets tied to manufacturing may decline in regions that are transitioning to a service-based economy.

It’s important to note that a market in structural decline is not necessarily unprofitable. Companies can often still find ways to succeed in these markets by adapting their business models, finding niche opportunities, or consolidating market share. However, structural decline typically signals that a market’s best growth days are in the past.

Discussion

Starlink, a division of SpaceX, is planning to provide high-speed, low-latency broadband internet service globally via a vast network of satellites. If successful, this could have a significant impact on the trend of cord-cutting, which will generally take away customers from IPTV, satellite television, and cable television. Starlink will impact the Pay TV market in several ways:

• Increased Access: One of the primary limitations of cord-cutting currently is the availability of reliable, high-speed internet. This is particularly an issue in rural or remote areas where traditional broadband providers may not offer service. By providing global coverage, Starlink could make it possible for people in these areas to switch to internet-based video services.
• Competitive Pressure: The entrance of a new player in the broadband market could put competitive pressure on existing providers to lower prices or improve service. This could make cord-cutting a more attractive option for people who currently have access to broadband but find it too expensive or unreliable.
• Better Quality of Streaming: Starlink promises to deliver high-speed internet with low latency. This could provide a better streaming experience, particularly for high-definition or 4K content, and for live or interactive content where latency is a critical factor. This could further enhance the attractiveness of internet-based video services compared to traditional Pay TV.
• Emerging Markets: In many parts of the world, traditional Pay TV infrastructure is underdeveloped or nonexistent, but these areas may still have access to a satellite-based service like Starlink. This could lead to a situation where cord-cutting isn’t just a trend, but the default way that people access video content.

However, it’s also important to consider potential challenges. Starlink was still in a relatively early stage of deployment, and it remains to be seen how well the service will perform at scale. In addition, while Starlink’s pricing may be competitive compared to some existing broadband options, it may still be too high for some potential users, particularly in lower-income areas or countries.

While there are still many unknowns, the successful deployment of Starlink has the potential to accelerate the trend of cord-cutting by increasing access to high-quality broadband internet.