Pay TV still growing in Western Europe

Wednesday, June 5th, 2013 
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The number of pay TV subscribers in Western Europe increased by 1 million in 2012 to 94.1 million, and will climb by another million in 2013, according to a new report from Digital TV Research.

This comes despite pay TV subscriptions falling in Italy (down by 482,000) and Spain (down by 350,000) in 2012. Italy and Spain will experience further falls in 2013, but both countries will start to recover in 2015.

However, the Digital TV Western Europe report estimates that pay TV subscriptions in Germany increased by 689,000 in 2012 (prompted partly by analog DTH switch-off) and by 347,000 in France.

The number of pay TV subscribers in the region will top 100 million by 2018 – up by 6.9% since 2012. This comes despite the loss of 15.9 million analog cable subs over the same period. Digital cable will grow by 14.7 million subs and IPTV will climb by 6.5 million. However, pay DTH subs will only increase by 2.5 million. Pay DTT subscriptions will fall by 187,000 to 7.4 million.

Pay TV penetration will be 57% by 2018 for the 15 Western European countries covered in the report, up by only two percentage points on 2012. By 2018, pay TV penetration will range from nearly 100% in the Netherlands to only 24% in Spain. Five countries will exceed 90% pay TV penetration in 2018.

Simon Murray, report author, said: “Despite the number of pay TV homes increasing, pay TV revenues will remain flat at about $32 billion. The main reason for this is that ARPU is falling in most countries and on most platforms. The pay TV arena is becoming more competitive as new platforms (especially IPTV ones) launch and as cable operators upgrade their networks to offer bundles and advanced services such as HD channels and DVRs.”

He continued: “Additionally, rapid growth in higher-speed broadband connections allows more online video viewing [over-the-top]. So cable operators now offer cheaper and scaled-down basic packages to retain subs and to attract new ones. The knock-on effect resulted in DTH operators also dropping their basic package prices (and are reducing channel choice).”

TV ARPU also falls as cable operators and telcos convert their subscribers to double-play or triple-play bundles. These subscribers provide operators with higher overall [blended] ARPU than standalone TV subscribers, but lower TV ARPU. Double-play and triple-play subs are more loyal than standalone ones, thus cutting churn and the related subscriber-retention costs.

Western Europe pay TV revenues by platform ($ million)

                    2008    2012    2013    2018
                  ------  ------  ------  ------
Pay DTT              832   1,594   1,539   1,588
Analog cable TV    5,760   2,948   2,373       0
Digital cable TV   5,480   9,317   9,714  11,453
IPTV               1,090   3,235   3,529   4,161
DTH               13,339  15,666  15,453  15,267

Source: Digital TV Research Ltd

DTH will remain the most lucrative pay TV platform, but its revenues will fall by 2.5% between 2012 and 2018 – despite subs numbers rising by 4.8%. Cable TV revenues will decline by 6.6% over the same period, but subscriber numbers will also fall (by 2.6%). Leading the growth, IPTV revenues will climb by 28.6% between 2012 and 2018 to $4.2 billion (with subscriber numbers up by 41.3%).

With France (down 6.0%) and Italy (down 6.1%) experiencing sharp pay TV revenue declines in 2012, Germany (up 9.0%) provided balance. Germany will also record growth in 2013 – up by 4.0% – with Spain (down 7.0%) and Italy (down 3.9%) the worst affected. German pay TV revenues will increase by 13.0% between 2012 and 2018, followed by Austria (10.3%) and Portugal (9.0%). However, Finland (down 10.4%), Norway (down 9.2%) and Spain (down 9.3%) will suffer the most.

More: Digital TV Western Europe

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