European Pay-TV forecasts

An Analysis of the Macroeconomic Environment of European Pay-TV

Management Report published by: International Marketing Reports – January 2003

Author: David Brown

15 sections – 104 pages – 64 charts & tables

Price: £495, €745 or US$745

The full report can be obtained from International Marketing Reports at www.im-reports.com or

info@im-reports.com.

Executive Summary

Growth Sectors

Growth Markets

Report Objectives & Structure

Contents of Report

Tables & Charts

Links

pay-tv in europe - trends

Pay-television in Europe is an important and growing market. Already worth more than €20 billion in Western Europe, it will more than double this figure by 2008. If T-commerce revenues are included the figure will triple by 2008 to over €75 billion.

This expansion is being accompanied, inevitably, by increasing competition amongst content providers. Digital technology has brought down entry barriers and the competition has intensified between channels and content producers. The cake is getting larger, but it is being divided among more players.

At the same time, there is a trend towards consolidation and vertical integration on the distribution side that has led to fewer players and more power for the leading companies. This had meant a squeeze on channel providers, already under threat from increased competition. Carriage fees paid to channels are being reduced and alternative sources of revenue, such as interactivity, have proved illusory.

It has become very difficult for smaller, weaker channels to survive and many have failed and been forced to close. The advantage is with the larger groups with several channels than can benefit from economies of scale and well-known brands. They have the power to negotiate carriage fees, though at lower levels that previous contracts.

Even they cannot afford to be complacent, however, as competitors from other areas of the media and entertainment sector enter the market. MTV, for example, is facing fierce battles across Europe with local services, not least in the UK where publisher Emap has launched several new channels.

The first section of the report focuses on channels, with case studies on UK-based and pan-European channels and, in addition, a list of channels available in Western Europe.

growth sectors

The report finds that the strongest growing sectors in European pay-TV will be broadband and Video-on-Demand (VOD). This will be in line with the growing importance of personalised television, leading to a greater emphasis on programming rather than channels (with all this implies for branding and the distribution of content). Personalised Video Recorders (PVR) will have a big impact as they will change viewing habits, undermine advertising as a source of revenue and force advertisers to seek other ways of getting their message across. VOD and PVRs, will become a major form of television programme and film consumption.

Pay-TV Cable will do well in comparison to DTH (at least in urban areas), partly because it starts from a lower base and DTH is nearing saturation in the main pay markets, but also because of its bandwidth and return path advantages. In the UK, however, cable will continue to find it difficult competing against a dominant BSkyB unless it is prepared to invest much more heavily in areas such as VOD and customer service.

T-commerce revenues will expand substantially as technology improves and viewers get more used to using the TV set as a way to buy goods and services. Thus, while pay-TV revenues are forecast to rise by over 2.3 times, T-commerce revenues will go up by more than 12 times. This reflects that fact that it is starting from a relatively low base, but it does mean that T-commerce will generate nearly 40% of the Average Revenue per Unit or subscriber (ARPU) in 2008, compared to around 10% in 2002.

growth markets

The UK will remain the largest pay-TV market in Europe, with France and Germany strong in terms of revenues. As far as penetration is concerned, the UK, France, Spain and Scandinavia will be the strongest pay-TV markets in Europe in 2008.

On the content side, the winners will tend to be those who can secure content that people want and/or which delivers audiences valuable to advertisers and are effective at getting it distributed via all platforms. In general the bigger players who benefit from economies of scale, vertical integration and strong brands will always be at an advantage.

Report objectives & Structure

The report covers the macroeconomics – the overall assessment of the major European markets, including prospects and forecasts. It provides detailed information on the UK, France, Germany, Spain, Italy, the Netherlands, Belgium, Sweden, Denmark, Finland and Norway. For each country the report analyses the TV environment, channels available via satellite, pay-TV distribution including broadband, the pay-TV channels the each territory and prospects and forecasts up to 2008. The forecasts cover numbers and penetration for pay-television, cable, satellite, digital homes, broadband, VOD, and revenues from TV and from T-commerce.

The report concludes with an analysis of the European market as a whole as well as winners and losers in general terms.

The appendix of the report contains details of website addresses for further information on Conditional access, UK regulation and licensing, European regulation as well as a glossary.

Contents of Report

Executive Summary

Growth Sectors

Growth Markets

Objectives & Scope

Section 1. Pay-TV Channels

Premium channels

Artsworld

FilmFour

Basic pay channels

Discovery Europe

Fox Kids

Hallmark

Music channels -MTV

UKTV/ Flextech

Health channels -Channel Health

Section 2. Current European pay- TV & prospects

European digital take-up

Section 3. United Kingdon

UK TV environment

UK distribution

UK channels

UK prospects

Section 4. France

France TV environment

France distribution

France channels

France prospects

Section 5. Germany

Germany TV environment

Germany distribution

Germany channels

Germany prospects

Section 6. Italy

Italy TV environment

Italy distribution

Italy channels

Italy prospects

Section 7. Spain

Spain TV environment

Spain distribution

Spain channels

Spain prospects

Section 8. The Netherlands

Netherlands TV environment

Netherlands distribution

Netherlands channels

Netherlands prospects

Section 9. Belgium

Belgium TV environment

Belgium distribution

Belgium channels

Belgium prospects

Luxembourg

Section 10. Scandinavia

Scandinavia channels

Scandinavia prospects

Section 11. Sweden

Sweden TV environment

Sweden distribution

Sweden prospects

Section12. Denmark

Denmark TV environment

Denmark distribution

Denmark prospects

Section 13. Finland

Finland TV environment

Finland distribution

Finland prospects

Section 14. Norway

Norway TV environment

Norway distribution

Norway prospects

Section 15. European Prospects

Winners, losers and trends

Appendices

1. BSkyB Conditional Access charges and conditions

2. UK licensing & legislation

ITC Licence Documents & Application Forms 1

ITC Codes & Guidance Notes

ITC Programme Code

ITC Advertising Standards Code

ITC Code of Programme Sponsorship

ITC Rules on Amount and Scheduling of Advertising

3. European legislation

Television Without Frontiers Directive

4. Glossary

Tables & Charts

Chart 1: UK audience ratings

Chart 2: UK pay- TV growth

Chart 3:UK Broadband subscribers -Cable modem & ADSL

Chart 4: France audience ratings

Chart 5: German audience ratings

Chart 6: Italy audience ratings

Chart 7: Spain audience ratings

Chart 8: Netherlands audience ratings

Chart 9: Belgium audience ratings -Wallonia

Chart 10: Belgium audience ratings -Flanders

Chart 11: Sweden audience ratings

Chart 12: Denmark audience ratings

Chart 13: Finland audience ratings

Chart 14: Norway audience ratings

Tables

Table 1: Some recent UK channel launches

Table 2: Discovery's European distribution

Table 3: Fox Kids European distribution

Table 4: Hallmark's European distribution

Table 5: MTV's European distribution

Table 6: Flextech and UK TV distribution

Table 7: Channels on Astra

Table 8: Pan-European channels on Astra

Table 8: Central European channels on Astra

Table 9: Central European Channels on Astra

Table 10: Channels on Eutelsat

Table 11: Channels on Thor

Table 12: Channels on Hispasat

Table 13: UK basic facts

Table 14: UK DTT -Freeview channels

Table 15: UK channels on digital DTH ,

Table 16: UK pay-TV forecasts

Table 17: France basic facts

Table 18: French digital DTH channels

Table 19: France pay-TV forecasts

Table 20: Germany basic facts

Table 21: Gennan telecoms network levels

Table 22: Major German non-Telekom cable networks

Table 23: Germany digital DTH channels

Table 24: German pay-TV forecasts

Table 25: Italy basic facts

Table 26: Italy digital DTH channels

Table 27: Italy pay- TV forecasts

Table 28: Spain basic facts

Table 29: Spain digital DTH channels

Table 30: Spain digital forecasts

Table 31: Netherlands basic facts

Table 32: Canal Digitaal channels

Table 33: Netherlands digital forecasts

Table 34: Belgium basic facts

Table 35: Belgium channels -Flanders

Table 36: Belgium channels -Flanders

Table 37: Belgium digital forecasts

Table 38: Scandinavian digital DTH channels

Table 39: Scandinavia digital forecasts

Table 40: Sweden basic facts

Table 41: Sweden digital forecasts

Table 42: Denmark basic facts

Table 43: Denmark digital forecasts

Table 44: Finland basic facts

Table 45: Finland digital forecasts

Table 46: Norway basic facts

Table 47: Norway digital forecasts

Table 48: 2002 European pay-TV

Table 49: 2008 European pay- TV

Table 50: Winners & Losers

Links

BSkyB Conditional Access Charges and Conditions

From the BSkyB website – www.sky.com

BSkyB Corporate site

http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=bsy.uk&script=11931&item_id='home.html'

Conditional Access Charges

http://www1.sky.com/corporate/sssl.htm

Access Control Charges

http://www1.sky.com/corporate/sssl2.htm

UK Licensing & Legislation

ITC Licence Documents & Application Forms

http://www.itc.org.uk/itc_publications/licence_applications/index.asp

ITC Codes & Guidance Notes

http://www.itc.org.uk/itc_publications/codes_guidance/index.asp

ITC Programme Code

This version of the Code was effective from January 2002.

http://www.itc.org.uk/itc_publications/codes_guidance/programme_code/index.asp

ITC Advertising Standards Code

Issued September 2002

http://www.itc.org.uk/itc_publications/codes_guidance/advertising_standards_practice2/index.asp

ITC Code of Programme Sponsorship

http://www.itc.org.uk/itc_publications/codes_guidance/programme_sponsorship/index.asp

ITC Rules on Amount and Scheduling of Advertising

Issued December 1998

Contents:

http://www.itc.org.uk/itc_publications/codes_guidance/rasa/index.asp

European Legislation

Television Without Frontiers Directive

http://europa.eu.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=31989L0552&model=guichett

Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by Law, Regulation or Administrative Action in Member States concerning the pursuit of television broadcasting activities
- original title –

Preamble – Consolidated Provisions

http://europa.eu.int/eur-lex/en/consleg/pdf/1989/eu_1989L0552_do_001.pdf

http://europa.eu.int/eur-lex/en/consleg/main/1989/en_1989L0552_index.html

ITC Notes on European legislation

http://www.itc.org.uk/itc_publications/itc_notes/index.asp

Other EU Directives

The European Directive on the use of standards for the transmission of television signals (95/47/EC) was adopted on 24 October 1995.

http://europa.eu.int/eur-lex/en/lif/dat/1995/en_395L0047.html.

Further References

Europe’s Liberalised Telecommunications Market – A Guide to the Rules of the Game, EU Commission Staff Working Document.

http://europa.eu.int/ISPO/infosoc/telecompolicy/en/userguide-en.pdf.

The full report can be obtained from International Marketing Reports at www.im-reports.com or

info@im-reports.com.

Last revised: August 2003