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Content Distribution, emea, ott
Is the rapid growth of OTT in Europe impacting pay-TV?
Tuesday, June 26, 2018

While European pay-TV operators haven’t seen the same cord cutting trend as in North America, over-the-top video – both subscription based (SVOD) and advertising based (AVOD) – continues to gain traction on the continent.

A new report from Dataxis said the European pay-TV market grew by just 0.3% in Q1 2018 over Q4 2017, the lowest quarter/quarter net adds on record, ending the quarter with 185 million subscribers. Since Q 1 2017, pay-TV has seen its subscriber base grow 3.3%.

OTT meanwhile, grew some 50% since Q1 2017 and is up 188% since Q1 2016. From just 1% of the pay-TV market in 2016, OTT increased to 3.3% in Q1 2018.

Dataxis said 35% of the Pay TV subscribers receive direct cable, 31% satellite and 28% IPTV; DTT represents 3% of the subscribers’ total.

According to Dataxis:

  • Direct cable represents 64.8 million subscribers, including 42 million for digital cable, down slightly in Q1 2018 from Q4 2017. Liberty Global/ Vodafone accounts for 31% of the subscribers
  • Indirect cable (distributed to tenants via landlords) amounts to 18 million
  • Satellite decreased more substantially in Q1 2018, losing 400,000 subs since Q4 2017, and down 544,000 since Q1 2017. Dataxis estimates Sky Group and Tricolor (Russia), together hold 50% of the market, and have lost 140,000 and 80,000 subs respectively
  • The DTT market remained stable in Q1 2018, losing only 0.35% of its subscribers; it’s down 1.5% in the past two years, despite the launch of Freenet in Germany in 2017, which accounts for 18% of the DTT subscribers and gained 47,000 customers in Q1
  • IPTV continued to see growth in Q1, adding 1 million subs in the past quarter. Orange (France) and Rostelecom (Russia) account for 10% and 13% of IPTV subs respectively

Will European operators suffer the same fate as those in North America?

In the U.S., pay-TV operators lost more than 622,000 subs in Q1, and have seen penetration drop as consumers have steadily migrated to OTT platforms.

The disaffection with pay-TV in Europe is milder than in the United States and Canada, where bills for pay-TV generally are more than double those in Europe. But the allure of original content from Netflix, Amazon and others – and the single-digit price tag for those services – nevertheless is having an effect.

A recent report from Analysys Mason posits that paid-for OTT video services’ worth will increase from 8.1 billion euros at the end of 2017 to 18 billion euros by 2022, accounting for more than 80% of TV and video retail growth. SVoD services will account for almost three-quarters of this growth, but operators moving pay-TV services to OTT delivery will also foster multi-billion-euro growth.

Dataxis, earlier this year, said growth in the linear, over-the-top (OTT) pay-TV market in Europe was being driven by specialized content like sports and kids services. Both are seen as key drivers to OTT subscriptions and generally are expected to impact pay-TV subscriptions.

In Eastern Europe, according to research from Digital TV Research, cord cutting has become an issue in both Poland and Russia, where SVOD services like Netflix, Showmax, HBO Go, Ivi+ and Okko have prompted users to switch to OTT services.

Stay tuned.

Jim O’Neill is Principal Analyst at Ooyala. You can follow him on Twitter @JimONeillMedia and on LinkedIn

Jim O'Neill

An award-winning industry expert and futurist who specializes in the convergence of traditional TV and the Internet. My focus includes pay TV, Cloud TV, OTT, multiplatform media delivery, the ecosystem that surrounds it and consumer trends. A frequent speaker at CES, NAB, Digital Hollywood, Park’s Associates Connections events, Streaming Media and Digital Entertainment World, among others. I'm the Editor of Videomind, which in the past year has won awards from Editor & Publisher and Digiday. I'm also the Principal Analyst at Ooyala. I'm based in Michigan. I formerly was an analyst at Parks Associates and editor of FierceOnlineVideo and FierceIPTV. 

You can follow on Twitter @JimONeillMedia and on Linkedin