A report from the European Audiovisual Observatory finds that pay-TV and SVoD get the lion’s share of the audiovisual (AV) services market in the EU. Pay AV services accounted for 40 per cent of the AV services market in 2017 with pay-TV representing 90 per cent and SVoD the remaining 10 per cent.
Pay AV services are growing faster than the rest of the AV services market (pay AV services revenues clearly drove the AV market between 2008 and 2017 with a 5.2 per cent compound annual growth rate).
The surge of SVoD did not cause a significant slowdown of the pay AV services market, but did capture most of the revenues growth. The pay AV services subscriptions increase was driven by SVoD, however with a much lower ARPU (average revenue per user) than pay-TV.
The report also suggests that cord-cutting is not taking place right across the board in Europe and is very specific to national markets. Each national market has been and is still shaped by very specific conditions, often exogenous to the pay audiovisual services, including purchasing power, supply of free services, penetration and performance of broadband access and, obviously regulation.
Due to the specific convergence of market factors, both pay-TV and SVoD uptakes and market shares paint a very different picture from one country to another as well as from one player to another. This, says the report, is the result of a strong granularity of pay AV services’ market strategies.
The key message is that cord-cutting is one of the pay AV services market realities in Europe – but not the only one. It is not ubiquitous since it depends on the national market conditions of a highly diverse European pay AV services landscape.
Around 80 per cent of the pay AV services’ net additions were delivered by OTT (50 per cent) and IPTV (30 per cent) between 2008 and 2017. Pay-TV adoption growth was driven by IPTV (61 per cent) and Satellite (39 per cent) over the same ten-year period. However, the pay-TV base was still dominated by cable in 2017 but with a market share almost 20 per cent lower than in 2008 as the erosion of cable subscribers took hold between 2013 and 2017.
The report finds that Netflix, Comcast and Liberty Global controlled a third of all EU subscriptions to pay AV services in 2017. Almost 1 in 3 pay-TV subscriptions were signed off either to Liberty Global (UPC, Ziggo, Virgin TV, Telenet, Unitymedia TV) or Comcast (Sky), while Netflix and Amazon alone accounted for almost 80 per cent of the SVoD subscriptions in the EU.