Findings from Kagan, a media research group within S&P Global Market Intelligence, suggest that the 16 countries in its analysis had a combined 121.9 million paid subscriptions at the end of 2020, with the UK, Germany and France occupying the top three positions.
In a blog post, Michail Chandakas, Associate Research Analyst, and Vladimir Ryazantsev, Media Research Analyst, note that over the last five years, the total pay-TV base in the region grew at a CAGR of 0.2 per cent to reach 108.6 million at the end of 2020, with IPTV driving most of the growth at a 4.8 per cent CAGR over the same period.
“OTT is providing key content owners such as The Walt Disney Co., Discovery, Paramount and HBO, among others, with paid content growth opportunities that had waned on traditional pay-TV, although at a cost — consumers can easily churn at any time,” they advise.
According to Kagan, operators no longer consider subscription OTT services as adversarial competitors, therefore seeing distribution partnerships with certain providers as beneficial to both parties. “For example, an operator that concentrates on triple-play bundles, in which three services are offered at a discounted price, might have a relatively basic channels package when compared to Netflix Inc. or Amazon Prime Video,” they suggest.
“An OTT partnership is likely to boost the video offer and act as a marketing strategy to attract subscribers to purchase more generic services, such as fixed broadband and fixed telephony. The most recent example of a big partnership deal was Vodafone’s January 2021 announcement that it will offer Discovery Inc.’s subscription OTT service, discovery+, to over 100 million of its fixed and mobile subscribers in 12 European markets. Moreover, we are seeing operators, such as TalkTalk Telecom Group PLC in the UK, drop their pay-TV offers, relying instead on a mix of OTT services and free-to-air TV,” they say.
“In recent years, global OTT players such as Netflix and Amazon have overtaken pay-TV groups in the number of subscriptions in the region,” they observe. “Local broadcasters and multichannel providers have also managed to increase their subscription OTT market shares, riding the wave of consumers’ shift from linear to on-demand viewing, which has resulted in households subscribing to more services on average compared to previous years.”
As a result, Austria, Denmark, Ireland, Italy, Norway, Spain, Sweden and the UK had more OTT than pay-TV subscriptions at the end of 2020. These are all either fast-growing or mature markets when it comes to streaming-video uptake. “We expect this trend to continue, with OTT subscriptions trailing behind multichannel in only Belgium, Greece and Portugal in 2025,” they conclude.
The 16 key markets examined in are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK.