Pay TV Makes Steady Progress in Western Europe - eMarketer
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Pay TV Makes Steady Progress in Western Europe

Viewers are moving from satellite and analog cable TV to digital delivery methods

May 21, 2015

Nearly 57% of Western European homes already subscribe to pay TV, according to a new analysis of 18 countries by Digital TV Research. Its “Digital TV Western Europe Forecasts” reported that regional penetration was still rising and would reach 60.4% in 2020. This year alone, an improving economic climate was expected to lift the number of pay TV subscribers in the region to 99.0 million.

Pay TV Subscribers in Western Europe, 2010 & 2015 (millions)

The key trend in the evolution of pay TV is not the steady rise in household penetration, however, but the shift to digital platforms. Digital TV Research calculated that overall, pay TV subscriptions would climb by just 8.38 million (equivalent to 8.7%) between 2014 and 2020. During the same period, the digital subscriber base looked set to grow by almost 20 million (23.1%). Meanwhile, analog cable services were expected to become obsolete, as subscriber numbers shrink from an estimated 11.31 million in 2014 to nothing in 2019.

Digital TV Research estimated that digital terrestrial television and satellite TV would see their audiences grow by 6% and 5%, respectively, during the next four years. But as newer digital delivery systems gradually displace older platforms, Internet Protocol television (IPTV) and digital cable TV will likely be the chief beneficiaries. The number of IPTV subscribers was projected to jump 37% between 2014 and 2020, while digital cable was forecast to add almost 10 million subscribers—a rise of 30%.

These shifts won’t be directly reflected in revenue streams; for example, satellite TV revenues will likely be eroded despite higher subscriber numbers. As Simon Murray, principal analyst at Digital TV Research, noted: “[Average revenue per user] is falling in most countries and on most platforms.” Competition is driving prices down for many service bundles, and the bundling that boosts operator profits doesn’t do the same for broadcasters.

As a result, Digital TV Research projected relatively flat total revenues of about $32 billion for the Western European pay TV market during the forecast period.

The UK, with its long history of pay TV, was expected to be worth $7.57 billion in 2020. Revenues in Germany were estimated at $4.46 billion, though that country should continue to have more pay TV subscribers than any other country in the region.

IPTV Subscription Share Worldwide, by Region, Q4 2014 (% of total)

Western Europe is already a center of IPTV activity, according to Point Topic. It reported that in the final quarter of 2014, Europe (excluding Eastern Europe) accounted for nearly 30% of global IPTV subscriptions. Only East Asia claimed a greater share (just under 45%); North America represented 13.13%.

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