Paris, February 28, 2008 – Euroconsult, the leading international research and analyst firm specialized in the satellite & broadcasting sectors, announced today that the satellite TV market has entered into a new growth cycle worldwide with revenues reaching $59 billion at the end of 2007 and the number of satellite TV platforms increasing to a record 92 worldwide. According to the just released Euroconsult report “Satellite TV Platforms, World Survey & Prospects to 2017” in contrast to the competitive threat anticipated from telecoms and media convergence, satellite TV is proving to be a growth driver for the industry.
“We’ve seen an unprecedented increase in the number of satellite TV platforms worldwide since the early days of the industry, with 35 platforms launched in the last three years,” said Pacôme Revillon, Managing Director at Euroconsult. “Over 1,000 TV channels are added per year by satellite TV platforms worldwide,” he added “which in turn creates more interest among consumers and drives subscriptions.”
“Despite greater economic uncertainty in the short term, market drivers for satellite TV are going in the right direction, and close to 180 million subscribers to satellite pay-TV are expected by 2017 according to our research,” Euroconsult notes.
SATELLITE PAY-TV TAKING OFF IN EMERGING DIGITAL MARKETS
Emerging digital markets in particular are supporting growth, as the dramatic drop in hardware prices enables new platforms to come on line and offer inexpensive basic packages, encouraging adoption (ie. subscriptions). The number of platforms in emerging digital markets reached 63 in 2007 up from 30 in 2000. Last year, new platforms were introduced in Colombia, Brazil, Serbia, Croatia, Russia, Romania, Sub Saharan Africa and India. The opening of the Chinese market will also likely give a new boost to the industry.
Subscriptions to satellite TV platforms in emerging digital markets have grown, from 6 million in 2000 to close to 28 million in 2007.
TELECOM & CABLE OPERATORS - KEY INVESTORS IN NEW SATELLITE SERVICES
In the last three years, 19 out of the 35 new satellite TV platforms launched have been backed by telecom and cable operators. Nine of these were actually launched by telecom operators, and several others are currently under development, as confirmed by recent announcements (France Telecom, Portugal Telecom). Telefonica, which backed the launch of satellite TV platforms in Chile, Peru, Colombia, and Brazil, is a prime example of the new focus of telecom operators on satellite TV.
Telecom and cable operators’ renewed interest in satellite TV is driven by several factors including the desire to offer a triple-play package on a national scale, the time and cost required to extend the reach of TV-enabled terrestrial networks (cable, DSL, FFTH) and the need to amortize potentially costly programming over the largest possible subscriber bases.
LOW COST PLATFORMS CHALLENGING HISTORICAL BUSINESS MODELS
The most recent key trend in the satellite TV market has been the launch of a number of “low cost” platforms. In emerging digital TV markets, “low cost” platforms are primarily launched to stimulate takeoff of the market, with the most striking example in Central Europe in the last two years. In some of the most advanced digital TV markets, low cost initiatives are also emerging to challenge historical market leaders.
While the sharp decrease in equipment costs and the availability of affordable content has allowed low cost platforms to emerge, the business model has its challenges. With revenues per subscriber as much as five to ten times lower than historical platforms, low cost platforms still need to rapidly reach a critical mass of subscribers to recoup operating and investment costs. Difficulty reaching breakeven will most likely encourage consolidation within the next three to five years in markets with several platforms.
NEW BREAKTHOUGH SERVICES CONTRIBUTE TO INCREASES
In the developed digital markets (where subscriptions have already reached critical mass) satellite TV platforms need to increase average revenue per user (ARPU) and minimize churn by offering new services that create loyalty and justify premium package pricing.
Digital video recording is currently an industry focus. “DVR services are being rolled out in numerous markets and is a significant growth driver – contributing to increasing ARPU, reducing churn, and ultimately leading to improved financial performance,” points out Euroconsult. “Currently, 22 out of the 92 platforms in service are offering DVR premium services compared to only seven platforms in 2004.”
In contrast, high definition is still in an early stage except in the North American market where it is a must-have. Still, in 2007, the number of HD channels increased, and a growing number of platforms such as Cyfrowy Polsat, N in Poland and NTV+ in Russia have introduced HD channels in their offerings.
For other services such as mobility, many platforms have taken initiatives to build partnerships with cellular operators to access this emerging market. It nevertheless remains nascent and shall represent a limited growth driver for most platforms in the next few years.
“Satellite TV Platforms, World Survey & Prospects to 2017” examines the current state and future prospects of satellite TV platforms. The report focuses on three areas: content and service strategy; commercial performance; and financial performance. This 400-page report provides benchmarks for satellite TV platforms worldwide; assessment of best commercial practices and structural trends; ten-year forecasts on subscriptions per country; and highlights strategic issues for the sector including consolidation, competition, and emerging breakthrough services.
Euroconsult is the leading international research and analyst firm specialized in satellite applications, communications, and digital broadcasting. Euroconsult develops comprehensive research reports and forecasts; provides strategic consulting and analysis; & produces world summits. With 25 years of experience and more than 350 satellite-related consulting assignments, Euroconsult is a worldwide reference. Euroconsult has over 560 clients in 51 countries, including leaders throughout the satellite value chain: media and broadcasting companies, satellite operators and service providers; satellite manufacturers and launch service providers; equipment providers and integrators; space institutions; and banks and investors.
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