Advanced Television

Transponder market will get tough

August 12, 2011

Euroconsult, the international research and analyst firm specialising in the satellite and digital broadcasting sectors, has revealed that the market reached new revenue highs once again.

According to Euroconsult’s report “Satellite Communications & Broadcasting Markets Survey, Forecasts to 2020,” the fixed satellite sector grew both in terms of transponder demand (+4.4 per cent) and revenue, which reached $10.8 billion in 2010. However, this is set against a backdrop of slowing growth rates and a more challenging business environment in the next several years. Euroconsult nevertheless maintains an overall positive outlook for the future of the satellite sector with television broadcasting and emerging markets continuing to drive growth and high throughput satellite (HTS) capacity systems contributing to growth as well.

“While we have seen slowing growth rates in leased capacity, FSS operators’ revenue growth has continued to outperform the global economy, and operating margins remain high for most operators. In the near term, the difficult economic environment could weigh on the market.” said Pacôme Revillon, CEO at Euroconsult. “Still, connectivity needs and the growth of digital TV in emerging regions, combined with the launch of new generation high throughput satellite systems should continue to drive growth. The value of satellite capacity leasing should consequently grow at 7 per cent 1 over the next ten years.”

Global demand for capacity usage slowed for the second year in a row, growing at a rate of only 4.5 per cent last year. While growth remained strong in several emerging regions such as Latin America and parts of Asia, poor performance in North America and Western Europe, and slower growth in Africa (following the arrival of submarine cable connectivity in many countries), dragged down overall industry performance. This slowdown was nevertheless somewhat expected as it followed a period of high growth in the sector, and the progressive maturing of certain segments.   There will likely be challenges at both the supply and demand levels in the next three years. On the demand side, certain segments such as military communications could see slowing capacity demand if US forces progressively withdraw from the Middle East and Afghanistan. On the supply side, the launch of large capacities should result in a decreasing average fill rate for the sector, which peaked at 78.5 per cent last year. While the situation will probably vary significantly from one region to another, lower fill rates in certain areas could put pressure on capacity prices and operator revenues.

In contrast to the historical FSS market, in recent years regional operators have been capturing a larger portion of new capacity leases and represent an increasing share of capacity supply. The four leading global operators’ 2 share of net capacity additions has decreased from roughly 70 per cent in 2005-2007 to 27 per cent in 2010. Although this may partly reflect different phases in operators’ investment cycles, it also underscores many regional operators’ aggressive development strategies and investments in new satellite systems.

TV channels broadcasting continued to drive growth for satellite operators last year, with over 29,000 TV channels distributed by satellite worldwide. Growth in number of channels broadcast was supported by the launch of 15 new satellite pay-TV platforms which were launched in emerging regions, for a total of 126 satellite TV platforms serving around 155 million subscribers worldwide.

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