There are now more homes paying for telco television services in Western Europe than homes subscribing to satellite television. The number of IPTV homes is forecast to increase by nearly 7 million by 2021, while the number of satellite subscribers is forecast to fall. Yet the opportunities for growth in satellite subscriptions should not be underestimated.
The Digital TV Western Europe Forecasts report from Digital TV Research predicts that pay-television penetration in the region will increase from 56.8% at the end of 2015 to 59.4% in 2021, with the number of subscribers rising from 97.4 million to 104.3 million.
However, the number of digital pay television subscribers will rise by nearly 17 million over the same period, with penetration increasing from 51.0% to 59.4%. This is partly because many analogue cable television subscribers, of which there were still 9.89 million at the end of 2015, are expected to migrate to digital services.
As a result, the number of digital cable television homes is forecast to increase from 32.62 million to 42.07 million.
In the 18 countries covered by the report there were 25.54 million homes with paid IPTV services in 2015, compared to 24.61 million homes paying for satellite.
The number of IPTV homes is forecast to increase to 32.53 million in 2021, while the number of pay satellite homes is expected to fall by 300,000 to 24.31 million. This is attributed to some operators, especially in Spain and Italy converting their satellite subscribers to bundled broadband services.
This seems like a pretty pessimistic forecast for satellite services. In our view there may be other factors to consider.
Sky is the leading satellite operator in Europe. According to the informitv Multiscreen Index, Sky ended 2015 with 21.47 million retail customers, an increase of 870,000 over the year. Not all Sky customers are satellite television households but the majority are and they make up the majority of the homes in Western Europe subscribing to satellite television.
The business logic for the consolidation of Sky services across the United Kingdom and Ireland, Italy, Germany and Austria, was partly predicted upon opportunities for growth as well as economies of scale. There is plenty of untapped potential.
25.85 million homes in Western Europe currently receive free-to-air satellite television, which is slightly more than the number that pay for satellite television. A further 48.26 million still rely on free-to-air digital terrestrial television.
One might presume that satellite subscribers might be tempted away by free and online services. Yet the penetration of pay television has been steadily growing in Europe, despite the competitive pressures and the strong tradition of free to air television.
The emergence of ultra-high-definition will provide differentiation for pay television, with satellite platforms well placed to deliver these services.
Satellite delivery will also become more blended with broadband, offering integrated multiscreen services. With increasingly flexible viewing options, in our view there is more opportunity for greater growth.
Digital TV Western Europe Forecasts is available from Digital TV Research. The Multiscreen Index is available from informitv.