DTH Satellite Markets Expand in Last 12 Months, but Future Remains Mixed

Tuesday, September 28th, 2010
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Subscribers Expected To Cross 217 Million by 2019 despite Increasing Pressure on Margins

CAMBRIDGE MA — According to a new report, Global Direct-to-Home (DTH) Markets, 3rd Edition, from Northern Sky Research (NSR), the DTH market is showing signs of maturity as developed economies reach saturation after analog switchovers, even as developing economies continue to increase subscriber numbers. At the end of 2009, a total of 113 DTH operators carried television services to over 130 million subscribers, up 14% from last year. The industry generated a staggering $70 billion in subscription revenue at a blended ARPU of $45. For satellite operators, the demand for over 850 transponders maintains DTH applications as the single largest satellite bandwidth consumer. Although the last twelve months was a strong growth period for all regions, NSR expects subscriber growth in the next year to move further away from developed economies towards South Asia and Eastern Europe.

NSR’s country-by-country approach allows it to quantify the impact of the economic changes on each region’s individual performance. Primary research, in the form of extensive interviews, confirmed that there is no universal truth that governs all platforms. Leading the way, North America is beginning to show signs of slowing down when it comes to DTH subscriber additions. As the United Kingdom’s leading operator nears the 10 million mark, Scandinavian providers are losing subscribers to competitive platforms. While operators in the Middle East emerge from a major consolidation, those in Central and Eastern Europe head towards a similar end in a struggle for profitability. Lastly, Sub-Saharan Africa is starting to mimic South America as smaller low-cost platforms emerge in populous countries to challenge the incumbent.

In some parts of the world, governments have played a supporting role by enforcing the migration to digital television, while in others like Southeast Asia, they have blocked entry of DTH operators in an attempt to shield national providers. Even a seemingly simple assumption that growing subscribers adds to profitability is negated by India where platforms are losing money for every new subscriber because of subsidies.

The response to premium services such as High Definition and Digital Video Recorders is polarized even further with the United States and United Kingdom accounting for nearly 80% of premium subscribers.

Highlighting the key findings of the report, Senior Analyst, Prashant Butani comments, “The Pay TV industry as a whole is becoming extremely competitive, be it over-the-top television in North America, digital terrestrial television in Europe or low cost DTH platforms in Africa and India. As far as subscriber growth is concerned, the balance of power has shifted further East with countries like Poland, Russia and India at the forefront. Financially, operators are being forced to rely on advertising and value added services, which will result in considerable pressure on margins.”