Western Europe: Pay TV revenues hit by triple-play growth

Tuesday, September 29th, 2009 

New research published today by Informa Telecoms & Media shows digital TV penetration of Western European households will maintain its present strong growth going from 62% at the end of 2008 to 93% at the end of 2014. But while the number of digital TV households increases over the next five years, pay TV revenues are forecast to peak at US$32.6 billion in 2011, with a slow decline expected from then on, reaching US$31.9 billion by 2014.

Informa’s latest Western European TV report shows that the Europe-wide switchover to digital TV is slightly behind the initial 2012 plan, with only eight countries (Finland, France, Ireland, Italy, Netherlands, Norway, Spain and the UK) expected to have 100% digital penetration by 2014.

Adam Thomas, Media Research Manager at Informa Telecoms & Media, said: “While the rise of digital TV is impressive, the difficulty is convincing customers to take a paid-for digital service. Cable will suffer particularly badly and is expected to lose its position as the region’s primary TV platform next year, when it will be overtaken by digital terrestrial TV. More than 40% of the digital additions between now and 2014 will be for free DTT and this is eating into pay TV’s share.”

The pay TV platforms are fighting back against free content by using dual- and triple-play packages (TV + Broadband + Telephone) to demonstrate to the customer that they are offering good value for money. But this has particular ramifications for the TV component of those bundled services. According to Thomas: “While bundling raises overall ARPU for operators, it reduces pay TV ARPU. So we are going to see an ARPU decline right across the pay TV platforms, with cable and IPTV hit hardest, but satellite ARPU also starting to reduce too.”