Western Europe’s Digital TV Conversion Slows

April 13, 2012 World Screen Top Stories
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LONDON: Western Europe is not expected to reach full digital TV penetration until 2017, with only two of the 15 countries covered having fully converted to digital at the end of 2011, according to a new report from Digital TV Research.

Finland and Spain have fully converted. Another two countries—Italy and the U.K.—are expected to join this year. Analogue DTH signals will end in 2012 and the last analogue terrestrial home will be switched off in 2013.

Simon Murray, the author of the report, said: “Six countries will not reach full digital TV conversion until after end-2015. However, Switzerland, which has the lowest digital penetration rate in Western Europe, will rapidly convert from the 56-percent penetration it recorded at end-2011.”

Murray added: “Analogue cable homes will be harder to convert to digital as many of these subscribers pay for basic packages as part of their rent. Operators have difficulties in accessing these households as they have to persuade landlords and housing committees to upgrade to digital.”

Western Europe will pass 150 million digital TV households this summer, with the total growing to 175 million by 2017. Free-to-air DTT will remain the most popular platform, followed by digital cable, recording 45 million subs in 2017.

Pay-TV penetration in Western Europe will average 59 percent by 2017, though that’s only 3 percentage points above the 2011 figures. By 2017, pay-TV penetration will be at nearly 100 percent in the Netherlands, hitting a low of only 29 percent in Spain. The number of pay-TV subscribers is expected to grow by nearly 10 million between 2011 and 2017 to reach 104 million. A loss of 16.5 million analogue cable subs will come over that same period. Digital cable is forecast to grow by nearly 16 million subs and IPTV will reach 6.5 million. Pay DTH is only expected to ruse by 2.5 million and pay DTT by 1.5 million. Even though the number of pay-TV homes is rising, pay-TV revenues are expected to remain flat, at $33 billion. ARPU is falling in most countries and on most platforms.

Murray said: “The pay-TV arena is more competitive than ever as IPTV platforms launch and as cable operators’ upgrade. Furthermore, rapid growth in higher speed broadband connections allows more online video viewing [over-the-top TV]. So cable operators now offer cheaper and scaled-down basic TV packages to retain subs and to attract new ones. The knock-on effect saw DTH operators also dropping their basic package prices and reducing channel choice.”

He continued: “TV ARPU also falls as cable operators and telcos convert their subscribers to double-play or triple-play bundles. These subscribers provide operators with higher overall [blended] ARPU than standalone TV subscribers, but lower TV ARPU. Bundles are particularly attractive during harsh economic times as consumers hunt for bargains. Additionally, double-play and triple-play subs are more loyal than standalone ones, thus cutting churn and the related subscriber-retention costs.”