Satellite TV platforms maintain growth despite tight consumer spendingThursday, January 14th, 2010
131 million subscribers worldwide in 2009 with emerging digital markets leading growth
PARIS — Euroconsult, the leading international research and analyst firm specialized in the satellite & broadcasting sectors, announced today that growth in the satellite pay-TV market remained strong in 2009 despite the global economic downturn. According to the just released 4th edition of “Satellite TV Platforms, World Survey & Prospects to 2019, Growth through the Crisis”, the number of TV Platforms in service increased to 113 in 2009 (+38% in three years). Pay TV platforms combined currently reach 131 million subscribers and earned $70 billion revenues in 2009.
“Subscriber growth in the satellite pay-TV market has been robust, increasing 15% worldwide,” indicated Pacôme Revillon, CEO of Euroconsult. “Growth in emerging digital markets has been particularly strong with subscribers reaching the 60 million mark in 2009, a nearly five-fold increase over the previous few years” he added. “Looking forward, the market is expected to remain bright with Euroconsult forecasting roughly 235 million subscribers worldwide by 2019.”
Nearly all markets, with the exception of Europe, saw revenue growth in local currency last year. However, more aggressive pricing strategies, both due to the crisis and to more intense competition, weighed down the average revenue per subscriber (ARPU), resulting in revenues growing more modestly than subscribers. While the aggressive pricing strategy currently practiced by many platforms drives subscriptions more than revenues in the short term, fee increases — which are very likely over time — should help securing long term revenue growth. This commonly-used strategy enabled platforms like Russia’s Tricolor TV to sign close to three million subscribers in only three years of operation with a basic package at around one dollar per month. Meanwhile, its rival NTV+ is still striving to reach the one million subscriber mark after more than a decade.
Emerging Digital Markets Boost Overall Market Growth
Emerging digital markets have experienced tremendous growth in the past few years. According to Euroconsult, the number of platforms in emerging digital markets reached 88 in 2009, up from only 30 in 2000. Subscribers in these markets grew from 11.9 million to nearly 60 million from 2003 to 2009. In India alone, there were 19 million subscribers spread over six platforms in 2009, despite a slow start in 2003/2004. The adjustment of subscription fees to compete more effectively with analog cable TV is partially responsible for stimulating subscriptions. Similarly, subscriptions in Central and Eastern Europe, at only 2 million in 2005 rose to 15.9 million in 2009, according to the Euroconsult report.
Some markets saw their first dedicated satellite pay-TV platforms in 2008 and 2009 – including the Maghreb region (North Africa), Venezuela and Bolivia. Other markets saw the introduction of several platforms simultaneously, such as in the Ukraine with three new platforms in only two years.
Solid Results In The Most Advanced TV Markets
Satellite TV Platforms in the most developed TV markets performed well overall, despite the economic crisis and growing competition from other delivery networks including IPTV and DTT.
In the US, the availability of new services including HDTV enabled DIRECTV and DISH Network to capture more than one million new subscribers combined, despite overall belt-tightening among consumers. The economic downturn had a stronger impact in Western Europe with subscription growth at slightly over 4%, but stagnation in revenues in local currency – the only market in which this occurred. Restructuring of certain platforms and stronger competition from terrestrial platforms also affected the market. In Germany (Sky Deutschland) and Spain (Digital+), satellite TV platforms actually saw revenues decline. By contrast, Sky Digital (BSkyB) in the UK remains a strong leader in the region, with subscribers increasing by 3% last year to 9.5 million, and revenue growth of 8% for the fiscal year ending June 30, 2009. Still, growth may resume in Western Europe, boosted by the introduction of new platforms in several markets such as France and Portugal and by the introduction of lower priced packages to drive overall market penetration.
Platforms Maintain Investments In New Services To Remain Attractive
In recent years Satellite pay-TV platforms have accelerated the roll out of value-added services such as HDTV and Digital Video Recorders (DVRs) with the more mature digital TV markets leading the way and emerging digital TV markets recently jumping on the bandwagon. These services require significant initial investment but have become mandatory for platforms to differentiate themselves from competitors. Moreover, value-added services offer other advantages including lower churn rates and higher ARPU.
DVRs and HDTV are currently the most dynamic services. At year-end 2009, 46 satellite pay-TV platforms had already rolled out HD services, up from 21 at the end of 2007. The two US platforms, DIRECTV and DISH Network, have the largest HD offers, with each broadcasting more than 150 HD channels in the first half of 2009. That same year, DVR services were also offered by more than 50 platforms across the world, up from 29 in 2007. MyTV Ukraine and Telesat in Belgium are two of the most recently launched DVR services.
One of the next value-added services to be offered by platforms is 3DTV. Sky Digital (UK) is expected to become the first platform to offer a 3DTV channel in 2010. Others should follow the path in coming years. For pioneers such as Sky Digital, value-added services build their brand image.
Consolidation And Vertical Integration Still Likely
Euroconsult expects the outlook for satellite pay-TV to remain positive and continuous growth is expected into the next decade, with an estimated 240 million subscribers worldwide by 2019. This growth will mainly come from emerging digital markets, in particular India, Russia, and Brazil as satellite pay-TV platforms multiply in those markets and affordable offerings increase uptake. Emerging digital markets should represent close to 70% of total subscriptions worldwide by 2019 compared to 45% in 2009.
However, the growing number of national markets served by multiple platforms (ex. seven platforms in Russia) and difficulties anticipated to reach profitability due to the slowing pace of subscriptions, will likely lead to consolidation in the next three to four years in certain markets. Vertical integration could also continue in both emerging and developed markets, driven by telecom operators’ investments in the content distribution business.
Satellite TV Platforms – World Survey & Prospects to 2019 is an in-depth analysis of the 113 satellite TV platforms in service around the world and provides key trends, growth drivers and forecasts that are critical for business planning in the Pay-TV sector. This fourth edition includes satellite TV platforms’ performances, analysis of commercial strategies and value-added services; satellite capacity demand (NEW); and ten-year country forecasts for subscriptions, revenues, TV channels & satellite capacity demand. The report also provides detailed analysis by region: North America, Latin America, Western Europe, Central & Eastern Europe, Middle East & Africa, and Asia Pacific.