Pay-TV revenues are expected to reach USD 36bn in 2016, compared to USD 34bn in 2011. The UK is predicted to contribute USD 9.5bn of the 2016 total, followed by Germany with USD 5.4bn. In contrast, on-demand TV revenues are expected to grow by 39% between 2010 and 2016 to reach USD 1.8bn, with buy-rate remaining lower than anticipated.
This sluggish revenue growth is particularly surprising given that 9mn pay-TV households will be added over the next five years, reaching 107mn by 2015 and pushing pay-TV penetration up from 58% to 61%. Falling ARPUs are believed to be to blame for this torpidity: the pay-TV arena is becoming more competitive as new platforms (and especially IPTV ones) launch and as cable operators merge to become stronger entities.
Furthermore, homes are rapidly converting to free-to-air DTT platforms, giving them access to a similar - but free - channel choice to a basic cable subscription. Also, the rapid take-up of higher-speed broadband connections also allows more over-the-top (OTT) video viewing.
“Cable operators now offer cheaper and scaled-down basic packages to retain subs and to attract new ones," said Simon Murray, author of the report. "The knock-on effect has seen DTH operators also lowering their basic package prices - and reducing channel choice. ARPU is also being forced down as cable operators and telcos convert subscribers to dual-play or triple-play bundles. These subscribers provide operators with higher overall [blended] ARPU than standalone TV subscribers, but lower TV ARPU. Dual-play and triple-play subs are more loyal than standalone ones, thus cutting churn and the related subscriber-retention costs.”
Penetration of digital TV services in Western Europe is expected to reach 99% by 2016, up from 79% in 2010 - or 172mn homes compared with 133mn. However, only 104mn of the 2016 total will pay for digital TV signals, compared with 73mn, according to the report.
Despite the onslaught from younger, rival digital platforms, cable is expected to maintain subscriber and penetration levels, with 45mn subscribers and 27% penetration predicted for 2016. However, cable TV revenues are forecast to drop USD 2bn between 2011 and 2016 to reach USD 11.3bn. Digital cable TV revenues are anticipated to climb USD 1.7bn during this period to reach USD 10.7bn, while analogue cable TV revenues will fall from USD 4.2bn to USD 0.6bn.
The number of homes in Western Europe paying for IPTV will increase by 45% between 2011 and 2016 to reach 19.5mn - or 12% of TV households. IPTV revenues are expected to grow by USD 1.1bn over the same period to reach USD 4bn.
Related articles:
1.Cable and satellite TV lead boom in Western spending on entertainment media
2.Satellite TV to overtake cable in Western Europe by 2015
3.Cable, satellite TV prices continue to rise
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