Russia to Drive Eastern European Pay-TV Market

LONDON, May 8: A new Screen
Digest report says that the total
pay-TV penetration in Central and Eastern Europe (CEE) will climb from 40
percent at the end of 2007 to 60 percent by 2012, with nearly half of the
region’s pay-TV subscribers located in Russia.

According to Screen
Digest, there will be a total of
63 million homes subscribing to pay-TV services in CEE, with Russia to drive
much of this growth, accounting for 28 million of the region’s pay-TV
subscribers by 2012.

Since 2004, the CEE
country economies and Russia have been growing at more than double the rate of
markets in Western Europe. The market grew at its fastest rate in 2007, with an
18-percent growth of total pay-TV subscribers.

The Eastern European
pay-TV market is dominated by cable, which comprises 80 percent of all pay-TV
homes, with almost one-third of the region’s homes taking cable services. A few
operators control the majority of the market, sharing it with many smaller
players. Screen Digest believes
that the market will experience consolidation over the next five years as the
major operators increase their market share through acquisition. While the
mature cable-subscriber base is not growing as fast as the newer satellite
platforms, the average revenue per user continues to rise, increasing by 10
percent on average in 2007. Screen Digest predicts that cable penetration will increase to 40 percent of homes
in 2012, from 32 percent at the end of 2007. Over the next five years, the
number of digital cable subscribers in the region is predicted to climb from
its current 2 percent to 18 percent of TV homes.

By contrast, satellite pay
TV is a small market, with an 8-percent penetration in CEE at the end of 2007.
However, Screen Digest expects
this to more than double to 16 percent by 2012, with all satellite homes being
digital. The demand for pay TV from consumers has grown with the improving
economy, and is driven partly by the increased number of channels on offer. In
Russia, the satellite pay-TV market is expected to grow rapidly; Screen
Digest forecasts there will be 5
million pay satellite customers by 2012, up from less than 1.5 million at the
end of 2007.

Other forms of pay TV,
such as digital terrestrial television (DTT) and IPTV, are much less advanced
in the region, and Screen Digest
expects that to remain the case to 2012. By 2012, less than 6 percent of the
region’s homes will rely on DTT as their primary method of TV viewing. IPTV is
a nascent platform in Eastern Europe; although growth will begin to take off in
2009, less than 3 percent of homes will use of IPTV as their primary TV
reception method by 2012.

Andrew Katolo, a research
analyst at Screen Digest,
commented: “The opportunities for investors, particularly in satellite pay-TV
platforms, are improving rapidly. However, aggressive pricing poses challenges
for the future and consolidation, in both the cable and satellite markets, is
likely.”

He continued: “Whilst
Western European pay-TV markets are almost at saturation point, there is still
huge potential for growth in the Eastern European markets and Russia
especially. Growth comes as more subscribers are attracted to the satellite
platform and new channels are launched to meet demand. Cable operators too are
starting the process of digitization, which will enable them to reap the
rewards of an improved viewer experience.”

—By Irene Lew