Sky Italia is set to lose 36 per cent of its value over the next five years, going from £2.6 billion (€31.bn) in 2014 to £1.6 billion in 2020, according to a report by Bank of America Merrill Lynch.

The Boiling Front report, whose findings have been anticipated by Italian daily Italia Oggi, indicates that the number of pay-TV subscribers will grow from the around 7 million in 2016 to 9.5 million in 2020.

However, the breakdown of the market will change. Currently, Sky Italia has 4.77 million subscribers, Mediaset Premium has 2.25 million (excluding pre-paid smart cards), whilst there are 182,000 subscribers to other offers.

By 2020, Sky Italia subscribers will grow to 5.16 million, mainly due to streaming pay-TV service Now TV. Mediaset Premium will have 3.24 million, while another 1.38 million will subscribe to “other” offers. Significantly, most of the growth will come from streaming, a business model that, according to Bank of America Merrill Lynch, represents the future of pay-TV.

In fact, Sky Italia’s market share will drop from 68 per cent in 2016 to 54 per cent in 2020, while Mediaset Premium’s will grow from 32 per cent to 34 per cent. Advertising revenue at Sky Italia will remain flat at €234 million.

Most of the growth at Sky Italia will come from Now TV, both in terms of subscriber numbers (from 150,000 to 590,000) and revenue (from €17 million to €79 million). Additional growth will come from the increase of the price of the subscription fee, especially for sports packages.

As a result, ARPU will increase from €35 in 2016 to €37 in 2020 for non-sports offers, from €45 to €50 for sports-offers and from €11 to €13 for Now TV.