European pay-TV revenues flat as competition, discounts depress margin

By Jim O'Neill on Jun 11 2014 at 9:00 AM

Increasing competition, aggressive discounting and cheaper double- and triple-play prices are stalling pay-TV revenue growth for European operators.

Pay-TV specific revenues are forecast to reach $40.35 billion in 2014, up just 0.6% from 2013’s $40.12 billion. Since 2010, pay-TV revenues have increased just more than 9% from $36.67 billion.

Digital TV Research, in its report, “European Digital TV Databook,” said that while bundles have increased overall operator ARPU, pay-TV ARPU has declined.

Still, IPTV is positioned to see the strongest pay-TV revenue growth this year, according to Digital TV Research’s report, “European Digital TV Databook.”

The telco segment is expecting revenues of $5.08 billion, up from $4.57 billion in 2013, an increase of about 11%. Since 2010, when revenues were $2.75 billion, IPTV pay-TV revenues have increased some 85%.

Satellite, the largest player in the space with 46% of pay-TV revenues, is expected to see income erode to $18.40 billion this year from $18.53 billion in 2013, down about 0.7%. The satellite sector has seen pay-TV related revenue grow just 6% since 2010, when it recorded revenue of $17.31 billion.

Cable, meanwhile, remains a tale of two technologies: analog and digital.

Combined, the segment is expected to see revenue drop about 0.7% this year to $15.61 billion from $15.72 billion in 2013. Digital cable pay-TV revenues are forecast to rise more than 5% in 2014 to $12.10 billion from $11.5 billion. Analog, however, is forecast to see revenues drop 17% to $3.51 billion from $4.22 billion.

Since 2010, combined cable pay-TV revenues have remained essentially flat since 2010, growing less than 2%. The industry saw pay-TV revenues of $15.39 billion in 2010. Digital cable, however, has seen revenues increase 36% since 2010, while analog revenues have declined 46%.

Pay DTT revenue is forecast to decline 3% this year to $1.26 billion from $1.29 billion, and down from $1.48 billion in 2010.

The report also said:

  • Western Europe pay-TV revenues will increase 6% to $33.8 billion in 2014, from $31.9 billion in 2010, an increase of 5.9%.
  • Eastern Europe pay-TV revenues will increase 32% to $6.5 billion during the same period.
  • The United Kingdom will remain the biggest pay-TV market in the region with revenues expected to top $7.84 billion, followed by Germany ($4.61 billion), France ($4.53 billion), Italy ($4.01 billion) and the Netherlands ($2.37 billion). Pay-TV revenues in Germany will increase by $945 million between 2010 and 2014 and by $813 million in Russia (nearly double its 2010 total). However, revenues will fall in the Czech Republic, France, Malta, Romania and Spain over the same period.
  • Pay-TV subscriptions will increase to 171.6 million in 2014, from 154.5 million in 2010.
  • The Western European total will grow by only 4 million to 97.3 million, with Germany (22.8 million), the U.K. (16.1 million) and France (13 million) the top three in the market.
  • A rapidly growing market in Eastern Europe is expected to climb to 74.4 million this year, an increase of 13.1 million since 2010.
  • Russia, with 34.8 million subscribers, will remain the largest market in Europe.
  • Digital TV penetration will reach 82% of European TV households by end-2014; up from 60% at end-2010.
  • There will still be 53 million analog homes remaining at end-2014; down from 115 million at end-2010.

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