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Eastern Europe still has plenty of room for digital TV growth according to Digital TV Research. Two-thirds of homes (76 million) were still receiving analogue signals at end-2010 but rapid conversion to digital TV means that nearly 67 million digital homes will be added by 2016. The Digital TV Eastern Europe report forecasts that the proportion of analogue homes will fall from 68 per cent to 11 per cent (12 million) by 2016 in the 15 Eastern European countries covered.
Report author Simon Murray said: “Pay TV consolidation was one positive outcome from the global economic recession that rocked Eastern Europe so badly. Positive because consolidation will lead to greater consumer choice through bundles, particularly as financially-stronger cable operators can take on the might of incumbent telcos. Greater competition will keep prices down and will lead operators to strive to offer more to entice new subs.”
He added: “Further good news for pay TV operators is that most Eastern European countries have been slow to implement analogue terrestrial switchover, with several postponing their own deadlines. This is good news for pay TV operators as it gives them more time to convert homes to their packages before FTA DTT becomes established. Only the relatively small territories of Croatia, Estonia, Latvia and Slovenia had achieved national analogue terrestrial switch-off by end-2010.”
Rapid conversion means that nearly 67 million digital homes will be added between 2010 and 2016, bringing the total to 104 million. Therefore, digital penetration will reach 89 per cent by 2016, up from only 33 per cent in 2010. However, 31 million of the additional digital homes will take FTA DTT signals, leaving 37 million extra digital pay TV homes. Seven countries will be completely digital by 2016.
Pay TV will be taken by 59 per cent of homes in 2016, up from 45 per cent in 2010 – or up 17 million to 68 million. There will still be 7 million analogue cable homes by 2016, although this is 20 million down on the 2010 total. Pay TV penetration in 2016 will range from 83 per cent in Latvia to only 28 per cent in Greece.
Pay TV revenues will be 26 per cent higher in 2016 ($8,960 million) than in 2011 (US$7,126 million). The number of pay TV subs will climb 28 per cent over the same period, indicating a small decrease in ARPU. Murray said: “There is downward pressure on ARPU as pay TV competition increases and as DTT makes an impact.”
Subscription TV revenues will grow US$2 billion between 2010 and 2016 – or by 30 per cent – to US$8.6 billion. Russia will contribute US$3.3 billion of the 2016 total, followed by Poland with US$1.8 billion. On-demand TV revenues will climb much faster, but will only total US$316 million by 2016.
Cable will increase subscriber and penetration levels, with 34 million subs and 29 per cent penetration expected by 2016. The number of analog cable TV homes will fall from 27 million in 2010 to 7 million in 2016. Meanwhile, digital cable subs will go the opposite way: from 6 million in 2010 to 27 million in 2016. Cable TV revenues will increase 11 per cent between 2011 and 2016 to US$4.1 billion. Digital cable TV revenues will climb by US$1.1 billion during this period to US$3.5 billion, with analog cable TV falling from US$2.4 billion to US$0.7 billion.
However, the number of homes paying for IPTV will increase by a massive 325 per cent between 2011 and 2016 to 14.0 million – to 12 per cent of TV households. IPTV revenues will quadruple between 2011 and 2016 to reach US$1.5 billion. Murray explained: “This strong growth comes as telcos have stolen a march on the fragmented cable sector.”
The fast expansion years for pay DTH are over. The number of DTH homes increased by 11 million between 2006 and 2011, but only 2.4 million more will be added by 2016. The sector has already seen some consolidation and platform closures (as seen recently in Romania), with more expected. Eastern European pay DTH revenues will be $3.3 billion in 2016, up only $0.3 billion on 2011. Poland and Russia will each supply more than $1 billion to the 2016 total.
Several countries covered in this report are EU members, with most of them obliged to terminate analogue terrestrial signals by 2015. Some smaller countries have already achieved national ATT switch-off, but others have delayed their own deadlines due to the economic crisis. At end-2010, 43.6 per cent (49 million) of the region’s homes still took analog terrestrial signals, though this is forecast plummet to 4.5 per cent (5 million) in 2016. FTA DTT will be the main recipient of the converting homes, increasing from 4.6 million homes (4.0 per cent) at end-2010 to 35.7 million (30.7 per cent) by 2016.