Pay TV in Central and Eastern Europe: trends and forecasts PAY TV IN CENTRAL AND EASTERN EUROPE: TRENDS AND FORECASTS

Transcription

1 REGIONAL FORECAST REPORT PAY TV IN CENTRAL AND EASTERN EUROPE: TRENDS AND FORECASTS MARTIN SCOTT AND ROMAN ORVISKY

2 About this report This report provides: forecasts for the number of pay-tv households, services, spend and average spend per user (ASPU) forecasts split by pay-tv platform: cable (analogue and digital), IPTV, pay DTT, satellite and OTT video to the TV forecasts for 8 individual countries and Central and Eastern Europe (CEE) as a whole an overview of the trends and drivers in the market top-level overviews of the key countries in the region. WHO SHOULD READ THIS REPORT Product and strategy managers within pay-tv operators who require market sizing for business planning purposes, as well as an overview of key trends affecting the market to help them to develop propositions accordingly. Business development managers within vendors of video solutions who need to assess the size of the opportunity for their products and services. Financial analysts who need to understand the dynamics and the size of the pay-tv market. Geographical Regions modelled: Central and Eastern Europe Countries modelled individually: Bulgaria Czech Republic Hungary Poland Romania Russia Slovakia Turkey REPORT COVERAGE Key performance indicators Pay-TV households (primary pay- TV services) Secondary pay-tv services Total pay-tv services Household penetration Spend linear programming Spend transactional video on demand (TVoD) and subscription VoD (SVoD) Spend total ASPU All of the above split by the following access technologies: cable (analogue and digital, CATV) IPTV pay DTT satellite (DTH) OTT video to the TV 1 1 A limited set of KPIs is available in this report for OTT video services to the TV. Additional KPIs will be available in our forthcoming forecasts for OTT video services in Europe. 2

3 Contents 5. Executive summary 6. Traditional pay-tv spend will grow by 12% between 2016 and 2022 OTT video is primarily additive in CEE, rather than substitutive 7. OTT-video-to-the-TV retail revenue will grow by EUR265 million, which equates to about half of traditional pay-tv retail revenue growth 8. Traditional pay-tv revenue will grow slightly in most markets, but OTT video to the TV will be the main driver of revenue growth across the board 9. Key trends, drivers and assumptions for the mobile and fixed markets 10. Key implications and recommendations for video providers 11. Regional forecasts and cross-country comparison 12. Geographical coverage: Penetration of IP-delivered video will remain low in the region, despite its significant gains in revenue 13. Revenue and ARPU: Traditional pay-tv spend will grow by 12% between 2016 and 2022, but OTT video will dramatically outpace IPTV spend 14. Access technologies: IPTV will continue to bring new customers to pay TV 15. Penetration dynamics: Penetration varies widely across the region availability of illegal services and affordability are the key factors 16. Individual country forecasts 17. Czech Republic: Aggressive discounting will bring some FTA users to pay TV for the first time 18. Poland: Large multi-play bundles and price competition will bolster DTH and IPTV 19. Italy: Operators have embraced OTT video services, which will overtake traditional pay TV around Russia: Subscriber and revenue growth will start from a high-penetration, low-value base 21. Turkey: The regional leader for IP video 22. Forecast methodology and assumptions 23. Our spend forecasts focus on linear and on-demand content to the TV 24. Our definition of OTT-video-to-the-TV services 25. About the authors and Analysys Mason 26. About the authors 27. Analysys Mason s consulting and research are uniquely positioned 28. Research from Analysys Mason 29. Consulting from Analysys Mason 3

4 List of figures Figure 1: Traditional pay-tv and OTT-video-to-the-TV retail revenue, Central and Eastern Europe, Figure 2: Pay-TV retail revenue growth by service type, Central and Eastern Europe, Figure 3: Pay-TV retail revenue growth by type and country, Central and Eastern Europe, Figure 4: Summary of key trends, drivers and assumptions for Central and Eastern Europe Figure 5: IPTV share of traditional pay-tv connections and OTT video to the TV as a percentage of households by country, Central and Eastern Europe, 2022 Figure 6: Traditional pay-tv and OTT-video-to-the-TV retail revenue, Central and Eastern Europe, Figure 7: Pay-TV spend and CAGRs by service type, Central and Eastern Europe, Figure 8: Pay-TV connections and CAGRs by service type, Central and Eastern Europe, Figure 10: Figure 10: Household penetration of traditional pay-tv services by country, Central and Eastern Europe, Figure 11: Household penetration of OTT-video-to-the-TV services by country, Central and Eastern Europe, Figure 12: Household penetration of pay TV by access technology, Czech Republic, Figure 13: Household penetration of pay TV by access technology, Poland, Figure 14: Household penetration of pay TV by access technology, Russia, Figure 15: Household penetration of pay TV by access technology, Turkey, Figure 16: Scope of our pay-tv spend forecasts Figure 17: Definition of OTT video services to the TV Figure 9: Pay-TV connections and ASPU by access technology, Central and Eastern Europe,

5 Penetration dynamics: Penetration varies widely across the region availability of illegal services and affordability are the key factors OTT video is growing at a slower rate in CEE than elsewhere, while traditional pay TV still has growth potential. Figure 10: Household penetration of traditional pay-tv services by country, Central and Eastern Europe, Traditional pay-tv services will continue to increase in penetration in all CEE markets, albeit at a slower pace than previously. This continued increase will be driven primarily by bundled IPTV services and by divergence in tariffs. Average spend will stay relatively stable, but low-end tariffs will become cheaper while premium tariffs become slightly more expensive this lower barrier to entry will encourage any remaining growth. Penetration of traditional pay TV is lowest in Turkey, due to historical issues with affordability and, more recently, traditional providers embracing OTT services. The high penetration in Slovakia and Romania has been driven by ubiquitous, affordable cable and satellite. The longer-term trend for pay-tv penetration depends on how tightly pay-tv services remain bundled to telecoms services some disintermediation is likely in the long term. Figure 11: Household penetration of OTT-video-to-the-TV services by country, Central and Eastern Europe, OTT video penetration is growing, although Figure 6 only shows the TV-related subset of this, as it excludes mobile and PC-only users. OTT take-up has been dampened by piracy and the low price of legal alternatives, particularly in Russia, which will remain underpenetrated. Turkey has experienced rapid growth in OTT video services, due to the wide availability of smart and connected devices and the proliferation of OTT service providers. It will continue to outperform the region as a whole. 15

6 Russia: Subscriber and revenue growth will start from a high-penetration, low-value base Very low ASPU has driven, and will continue to drive, subscriber growth, but ASPU will also grow by 12% during PAY-TV MARKET KPIs 2022 Affordability issues and piracy have kept prices low in Russia for all technologies. Furthermore, because all prices are low, the price difference between analogue and digital cable or IPTV is small (around 25%), which has made it easier for operators to push consumers into digital upgrades. Operators such as Rostelecom are actively migrating customers from analogue CATV to IPTV with a small associated increase in spend that, cumulatively, adds up to quite significant revenue growth. Correspondingly, the number of CATV subscribers in Russia will decrease by 1.2 million between 2016 and 2022, falling from 17.8 million to 16.6 million. DTH OTT CATV IPTV 81% 6% PAY-TV MARKET LEADERS, PER MONTH Figure 14: Household penetration of pay TV by access technology, Russia, % 29% 39% 2% 42% 7% 7% 7% 23% 17% Tricolor TV Orion ER-Telecom RosTelecom MTS Others CATV IPTV DTH OTT 19

7 CONTENTS EXECUTIVE SUMMARY REGIONAL FORECASTS AND CROSS-COUNTRY COMPARISON INDIVIDUAL COUNTRY FORECASTS ABOUT THE AUTHORS AND ANALYSYS MASON 24

8 About the authors Martin Scott (Principal Analyst) co-ordinates Analysys Mason s research initiatives related to media, TV, fixed broadband and convergence. He manages the Video Strategies and Fixed Broadband Services research programmes. Martin has held numerous positions within Analysys Mason during the last 13 years, including heading the company's Consumer Services, Data and Regional Markets practices. He also launched Analysys Mason's Connected Consumer Survey and Consumer smartphone usage series of research. His areas of specialisation include telco TV strategy, OTT video and media, consumer smartphone usage, the bundling and pricing of multi-play services, including quadruple-play bundling, customer satisfaction and consumer-facing marketing strategy. He also specialises in statistics, surveys and the analysis of primary research. Roman Orvisky (Analyst) is a member of the regional markets research team in London, contributing mainly to the Telecoms Market Matrix, European Core Forecasts, European Country Reports and Global Core Data programmes. Prior to joining Analysys Mason in November 2014, he worked in the Transaction Services department of the Royal Bank of Scotland in a customer experience internship role. During his studies, Roman focused on consumer behaviour in an online context, and has experience in churn modelling in the telecoms sector, social network analysis and browsing data analysis. Roman holds a bachelor's degree in business from Durham University, and an MSc in marketing research from the Tilburg University School of Economics and Management. 25

9 Analysys Mason s consulting and research are uniquely positioned Analysys Mason s consulting services and research portfolio CONSULTING We deliver tangible benefits to clients across the telecoms industry: communications and digital service providers, vendors, financial and strategic investors, private equity and infrastructure funds, governments, regulators, broadcasters, and service and content providers. Our sector specialists understand the distinct local challenges facing clients, in addition to the wider effects of global forces. We are future-focused and help clients understand the challenges and opportunities that new technology brings. RESEARCH Our dedicated team of analysts track and forecast the different services accessed by consumers and enterprises. We offer detailed insight into the software, infrastructure and technology delivering those services. Clients benefit from regular and timely intelligence, and direct access to analysts. 26

10 Research from Analysys Mason 27

11 Consulting from Analysys Mason 28

12 PUBLISHED BY ANALYSYS MASON LIMITED IN OCTOBER 2017 Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0) Registered in England No All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party.