10/31/2013 12:10 EDT

Cord-Cutting Canadians Not A Threat To Cable Businesses: PwC Report


Canadian media insiders are confident that cord-cutting poses no real threat to the country’s cable television business for at least the next five years, according to a new industry outlook from PwC.

The accounting and consulting firm, formerly known as PricewaterhouseCoopers, said in a report released early Thursday that it projects the sector will continue to grow at a rate of five per cent per year through 2017, a conclusion it reached after gathering insight from two dozen Canadian “entertainment and media leaders.”

“We don’t believe there’s going to be a tipping point within the next five years when it comes to cord-cutting or drastic cord-shaving,” the report concluded.

Many studies have concluded that Canadians are cutting their cable cords as more alternatives to traditional TV enter the marketplace, including Netflix, Apple TV, iTunes and illegal bittorrents.

But so far the impact on cable companies appears to be minimal.

A report in August suggested five of Canada’s largest cable and satellite TV providers saw a drop in subscribers in the second quarter of 2013. Convergence Consulting estimated earlier this year that one in 50 Canadians has cancelled their cable subscription, while audience measurement firm ComScore found that 16 per cent of Canadians no longer watch any conventional TV.

“Canadians are not cutting the cords yet, and we don’t expect that trend to shift anytime soon,” says Lisa Coulman, partner in the audit and assurance group at PwC.

“However, while they may not have concerns about costs, what they do want is choice and an experience made just for them. As such, there is pressure on companies to meet these demands and invest in new ways of providing content.”

Given the influx of new options, Canadian audiences are increasingly expecting customization and flexibility, PwC said, adding that as a result, traditional media providers will face challenges from new technologies and rapidly changing consumer demands.

As technology increasingly allows Canadians to watch their favourite shows when, where and how they choose, many companies are already experimenting with new ways to generate revenue, attract and measure advertising and to connect with consumers.

“Companies will need to watch the fine balance between price and quality content. If this balance gets too far out of line, there will be a tipping point for consumers,” the report said.

In order to compete with so-called over the top content providers such as Netflix, PwC suggests Canadian broadcasters will have to focus on finding new ways to deliver content to consumers, who are keeping their cable but increasingly gravitating toward on-demand and PVR viewing.

PwC identified the trend of second-screen viewing – using a tablet, smartphone or computer while watching TV – as both a potential challenge to hold the attention of multi-tasking viewers and an opportunity to target and interact with customers.

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