Eastern Europe to add 13 million digital TV homes in 2013

Digital TV homes to double in Eastern Europe

Rapid conversion means that the number of digital homes in Eastern Europe will nearly double between 2012 and 2018, bringing the total to 121 million, according to a new report from Digital TV Research. In fact, the Digital TV Eastern Europe report estimates that 13 million digital TV homes will be added in 2013 alone.

Eastern Europe TV households by platform (million)

                     2008   2012   2013   2018
                    -----  -----  -----  -----
Analog terrestrial  67.50  37.17  28.77   0.04
Pay DTT              0.06   0.55   0.73   1.46
FTA DTT              1.03  14.45  20.31  41.82
FTA digital DTH      6.37   9.09   9.05   9.17
Pay DTH             13.09  23.88  25.97  32.50
Pay IPTV             0.95   5.86   7.45  12.63
Digital cable TV     2.32   9.16  11.61  23.78
Analog cable TV     28.47  21.67  18.42   3.39

Source: Digital TV Research

Digital TV penetration crossed the halfway mark of TV households in 2012, up from only 20% at end-2008. Fast take-up (and analog terrestrial switch-off) will push digital TV penetration to 61.4% by end-2013 and onto 97.3% by 2018. Ten of the 21 countries covered in this report will be completely digital by 2018, with Estonia the first to full conversion – in 2012.

The number of analog terrestrial TV households fell by 30 million between 2008 and 2012, leaving 37.2 million. However, only 13 million DTT homes were added, therefore the digital pay TV platforms benefitted from the analog terrestrial homes converting to digital. With nearly all of the analog terrestrial TV homes disappearing, there will be 43.3 million DTT homes (or about a third of the TV households) by 2018.

Simon Murray, Principal Analyst at Digital TV Research: “Much of the emphasis has fallen on the remaining 21.7 million analog cable subscribers. Many of these homes will upgrade to digital cable, but some will shift to IPTV and DTH. However, many of the remaining analog cable subscribers are refuseniks, who don’t want to pay more for TV services. Free-to-air DTT (or even pay DTT) is an attractive option for these homes.”

Murray continued: “Slow implementation of analog terrestrial switchover favored the pay TV operators as it gave them more time to convert homes to their packages before FTA DTT became established. Poland and Romania are prime examples of this. However, we expect the impact of DTT in these two countries to result in (small) declines in their pay TV subscriber counts.”

Eastern Europe pay TV revenues by platform (US$ mil.)

                     2008   2012   2013   2018
                    -----  -----  -----  -----
Pay DTT                 2     40     54    121
Analog cable TV     2,070  1,504  1,301    232
Digital cable TV      328  1,208  1,470  2,750
IPTV                   91    593    765  1,317
DTH                 1,425  2,413  2,579  3,124

Source: Digital TV Research

Pay TV revenues in Eastern Europe will be 31% higher in 2018 (US$7,544 million) than in 2012 (US$5,759 million). The number of pay TV subs will climb by 21% over the same period; demonstrating higher ARPU from digital subs than analog ones. DTH will overtake cable as the most lucrative platform in 2017. IPTV revenues will more than double between 2012 and 2018.

Russia will contribute US$2.2 billion of the 2018 pay TV revenues in 2018, and will be responsible for US$1 billion of the region’s US$1.8 billion additional pay TV revenues between 2012 and 2018.

At the other end of the scale, five countries (Hungary, Montenegro, Poland, Slovakia and Slovenia) will experience almost flat pay TV revenues. Much of this is due to subscriber conversion to double-play and triple-play packages (where TV receives a lower proportion of the ARPU than for standalone subs) and greater competition.