Poland Points the Way

November 21, 2011 World Screen

 

This article originally appeared in the MIPCOM 2011 issue of TV Europe.
 
New media is reshaping the television landscape in Poland, a thriving market that has become increasingly attractive to international channels.    
 
Throughout recent history, Poland has been a step ahead of its neighboring countries. While still part of the Soviet bloc, it was the first to organize a mass political movement, the trade union Solidarnosc.
 
After the fall of communism, it was one of the first to deregulate its TV broadcast industry. The desire for freedom and entrepreneurship gave rise to a vibrant, competitive media market—one of the largest in Central and Eastern Europe—that has attracted considerable foreign investment.
 
Most recently, while its neighbors were strongly affected by the economic downturn, Poland did not slip into a recession. This bodes particularly well for the country’s television market. Serving some 13 million homes, it includes a public broadcaster, two national commercial networks, regional and local stations, numerous thematic channels, a mature cable industry, a new DTT sector and no fewer than five DTH platforms.
 
Although the market has changed beyond all recognition in recent years, the publicly owned Telewizja Polska (TVP) and national commercial broadcasters Polsat and TVN still remain the largest players and in many ways continue to set the agenda.
 
TVP, for instance, now has no fewer than six thematic channels in addition to its main TVP1, TVP2 and TVP Info services. TVP Parlament, the newest of these, was launched this June as a purely Internet-delivered channel.
 
The Internet is, in fact, becoming an increasingly important element of TVP’s strategy. The pubcaster operates a portal named vod.tvp.pl that offers viewers clips from series, feature films, documentaries and archive material on an on-demand basis. Earlier this year, TVP’s VOD service became available on the Samsung Smart TV platform.
 
COMMERCIAL INTERESTS
In the commercial-TV space, Polsat, launched by the local entrepreneur Zygmunt Solorz-Zak in 1992, has evolved into one of the region’s leading broadcasters. Besides operating a national TV channel, it also has a portfolio of thematic services and, until recently, included Cyfrowy Polsat, the leading DTH platform in Poland, among its interests. This April, however, Cyfrowy Polsat bought its parent company in a deal worth €1.1 billion, thereby creating the largest media group in Poland. 
 
Like TVP, Polsat is keen to exploit the opportunities offered by the Internet and currently operates—through a whollyowned subsidiary named Redefine—an interactive media platform named ipla.
 
Launched in 2009 and claiming be the largest such service in Poland, with between 2.5 million and 3 million users each month, ipla’s offer includes over 1,000 movie titles from, among others, Warner Bros., Paramount, DreamWorks and SPI. It, too, can be accessed on the Samsung Smart TV platform, along with a host of other devices, including iPads, PlayStation 3s and Smart TVs from LG, Sony and Panasonic.
 
Rival commercial broadcaster TVN was launched in 1997 as a joint venture by Central European Media Enterprises (CME) and the Polish media company ITI Group. It then came to be operated by SBS Broadcasting and ITI Group before being taken over by the latter. Under its current structure, TVN is 56-percent owned by ITI Group, whose interests include ten TV channels, the DTH platform n and its sister service TNK, and the online portal and multimedia platform Onet.pl. This platform has offered viewers an on-demand service named OnetVOD since February 2010.
 
Following growing speculation in the local press, ITI Group finally confirmed this July that it is “reviewing its strategic options” on the 56-percent stake in TVN. Its statement is likely to have alerted a number of potential buyers, including Time Warner, Bertelsmann, News Corporation and Modern Times Group, believed to be interested in entering the lucrative Polish TV market. 
 
BUYING TIME
Although Poland was one of the few countries in Europe to escape a recession during the recent global economic crisis, its ad market, according to the local media sales house Starlink, shrank by 11 percent in 2009. It then bounced back the following year, growing by 4.5 percent to €1.9 billion.
 
Significantly, TV spend in 2010 rose by 7.2 percent and accounted for 52.3 percent of the total market, up from 51 percent a year earlier. What is more, thematic channels were responsible for the majority (4.9 percentage points) of the 7.2-percent growth and in total claimed 16 percent of the TV ad-spend pie.
 
While figures for the first quarter of this year produced by Starlink pointed to a slowdown in growth, the general trend remained the same. Namely, thematic services generally continued to gain at the expense of the main “classical” channels and looked set to account for 20 percent of TV ad spend by the end of the year.
 
On the other hand, one of these main channels, Polsat, had ad revenues 14.9-percent higher in the first quarter than during the same period in 2010, while those of the public broadcaster’s second channel, TVP2, were up 3.6 percent year-on-year. VIVA Polska, the most successful thematic channel, actually saw its ad revenues fall by 2.2 percent year-on-year in the first quarter.
 
There are also mixed views as to how the ad market will perform this year as a whole. While Starlink expects it to grow by around 5 percent, ZenithOptimedia Group Polska predicts 2.4 percent, with TV spend up by 2.6 percent. However, there is general agreement that the ad market, and especially TV and the Internet, will benefit enormously from the Euro 2012 football championships, which will be co-hosted next year by Poland and Ukraine.
 
The four main channels, TVP1, TVP2, Polsat and TVN, still claim the highest viewing figures and are likely to do so for the foreseeable future. They nevertheless continue to lose share to both smaller local and international services.
 
LEADING THE PACK
Generally speaking, TVP1 attracts the most viewers in the 4-plus age group, with TVP2, TVN and Polsat battling it out for second place. They are usually followed by TVP Info, TV4, TV Puls and the news-based TVN24, consistently the most popular thematic channel. A similar pattern is seen among cable and satellite viewers, while in the important 16-to-49 age group, which appeals the most to advertisers, TVN usually has the highest shares among urban viewers.
 
All four main channels have long-established programs that continue to attract high viewing figures. Those on TVP1, for instance, include the current-affairs show Teleexpress, which this year celebrated its 25th anniversary and claims, according to Nielsen, an audience share of almost 40 percent in the 4-plus age group. Interestingly, it is estimated to have earned the public broadcaster €262 million in ad revenues in the last 14 years alone.
 
TVP2, on the other hand, continues to enjoy success with the locally produced soap opera M jak miłoscść (L for Love). As of June, it was attracting, again according to Nielsen, an average of 7.5 million viewers and an audience share of 45.7 percent in the 4-plus age group.
 
Polsat, meanwhile, lists the comedy series ŚSwiat według Kiepskich (The World According to the Kiepskis) among its most popular shows. Launched in 1999, it attracted, according to Nielsen, around 2.8 million viewers and an average audience share of 17.12 percent in March of this year.
 
The top programs on TVN include the entertainment-based Szymon Majewski Show, which at the same time claimed around 2.5 million viewers and an average audience share of 18.63 percent.
 
Perhaps not surprisingly, the lucrative nature of the Polish market continues to attract a growing number of international channels. In the case of Discovery Communications, Poland is already the company’s third-largest source of revenue outside the U.S. after the U.K. and Brazil and also the first in line for new channel launches.
 
What is more, Viacom International Media Networks (VIMN) and Endemol have gone one stage further by launching a new global entertainment brand in Poland. Known as Viacom Blink!, the female-skewed channel, which it is hoped will eventually be as well known as MTV and Nickelodeon, was launched this July and will in due course be rolled out to other markets in the region.
 
Nonetheless, most new market entrants are locally produced channels, and their number is set to grow thanks to the recent launch of DTT services in Poland.
 
Following months of wrangling, the country finally launched what are its second and third multiplexes in quick succession in late 2010. The second, known as MUX-2, is allocated entirely to commercial services, with the four leading broadcasters in the sector each being allowed to carry one additional channel. As of this past July, Polsat had been joined in the lineup by Polsat Sport News, TVN by TVN7, and TV4 by the newly launched entertainment channel TV6. TV Puls, however, had yet to add its second channel, to be called TV Puls 2, which is expected to make its debut at the end of this year or in early 2012.
 
The third multiplex, MUX-3, was meanwhile carrying the public channels TVP1, TVP2, TVP Info, TVP Kultura and TVP Historia.
 
MULTIPLEX MAZE
Somewhat surprisingly, the biggest debate has centered around who will operate the first multiplex, MUX-1, and the four channels it will carry, in addition to TVP’s three main services. The National Broadcasting Council (KRRiT) organized a tender in early 2011 for the four channel li­censes, which were won by Kino Polska TV, Eska TV, ATM Grupa and Stavka. Kino Polska TV subsequently returned its license, which was then awarded to Lemon Records.
 
Eska TV now aims to offer a music-based channel of the same name on the multiplex; ATM Grupa is planning an entertainment-based service named ATM Rozrywkowa TV; Stavka has a news and current-affairs channel named U-TV in the works and Lemon Records will launch a music channel named Polo TV.
 
Although it has also been decided that the national transmission company Emitel will operate MUX-1 (in addition to MUX-2 and MUX-3), the multiplex is unlikely to be fully operational until mid-2012.
 
Legislation has unfortunately not kept up with the rollout of DTT services, with a new law on digitization only being approved by the country’s parliament (Sejm) this summer. One of its most important clauses was to set the analogue switch-off date for July 31, 2013.
Also on the regulatory front, Poland amended its media law earlier this year, addressing such issues as frequency of television advertising and product placement. The amended legislation maintained the product-placement ban, with limited and clearly marked exceptions in some movies and TV shows. However, it failed to address such areas as on-demand services.
 
DTT services are likely to have their work cut out for them as they strive to gain a foothold in a marketplace in which cable and DTH reception is already so popular and well established. In the case of cable, which serves around 4.5 million households, UPC Polska, Vectra, Multimedia Polska and Aster are the largest operators.
 
In December 2010 it was announced that Liberty Global, UPC Polska’s owner, had agreed to buy Aster from Mid Europa Partners (MEP) for PLN870 million (€201 million). In September, the competition authority, UOKiK, approved the deal, which will create a platform reaching a reported 1.4 million subscribers.
 
Poland’s cable market is maturing rapidly, with most of the leading operators now offering their subscribers additional services such as HD channels, VOD, DVRs and ultra-fast, DOCSIS 3.0-based Internet access.
 
SATELLITE FRAY
The DTH sector, meanwhile, goes from strength to strength, with services provided by no fewer than five platforms. Cyfrowy Polsat, the market leader, is a triple-play company, using HSPA+ and LTE technology to offer Internet access and its status as a mobile virtual network operator (MVNO) to provide telephony services. It introduced catch-up TV in early 2011 and plans to add VOD to its portfolio by the end of the year.
 
Cyfrowy Polsat ended the first quarter with almost 3.5 million subscribers, double that of its nearest competitor, Cyfra+. Backed by Canal+ Cyfrowy, whose other interests include a growing portfolio of thematic channels, Cyfra+ has always been regarded as a premium service and its offer includes VOD, multiroom subscriptions and HD services.
 
The DTH platform n and its sister service TNK are both operated by TVN. The n service was launched in September 2006 and was in many respects a pioneer, introducing HD, on-demand and DVRs to the Polish market. TNK, on the other hand, is a prepay service that has included a HD package since May 2010; the two platforms had a combined customer total of just over one million as of the middle of this year.
 
The fifth DTH platform is operated by the incumbent telco TPSA alongside an IPTV service.
 
Consolidation in the DTH sector is expected at some stage as the market moves toward saturation. Although Cyfrowy Polsat has expressed an interest in buying Cyfra+ should it come on the market, industry sources believe that one of the most likely deals could involve Cyfra+ and TVN.
 
With takeup of HD channels growing rapidly in Poland, it is perhaps not surprising that the country is also showing enthusiasm for 3D services. 3D test transmissions were undertaken by Cyfra+, among others, in 2010, and earlier this year a local production company named Astro launched its first four channels, three of which (NEXT Man 3D, NEXT Lejdis 3D and NEXT Young 3D) are in the 3D format. Astro produces 3D content in the world’s first virtual 3D studio, which is located in the country’s capital, Warsaw.
 
If the Polish economy remains strong and the advertising market grows, as expected, in the mid-single-digits range this year, there is no reason that Poland’s diverse TV market should not continue to remain vibrant.