Cyfrowy Polsat Closing The Gap On Cyfra +

The Polish pay-TV market has seen the emergence of a dynamic new player in recent years, with Cyfrowy Polsat emerging as a major threat to Cyfra +. While cable still is the dominant pay-TV platform in Poland, satellite pay-TV is growing fast.

Cyfrowy Polsat already has close to 400,000 subscribers, and it is growing its subscriber numbers at a rapid clip. Poland has around 13 million TV households with some 4.5 million taking pay-TV services. There is an addressable market of 8.5 million households. Dominik Libicki, CEO of Cyfrowy Polsat, is anxious for his company to start addressing this market.

“In terms of the 8.5 million households, this is really a key for the DTH operators. In the last few years, cable operators have struggled in terms of growth. They haven’t invested heavily in infrastructure, concentrating on ARPU by bringing broadband to market for example,” he said. “There are also some Digital Terrestrial Television (DTT) projects now under research in Poland. They could also launch in the near future.”

Despite the dominance of cable in Poland, Libicki does not consider cable as the natural rival for its DTH business. “It’s because of two reasons. In Poland, there is a lot of hassle to put antennas on flats, and most of the city centers have easy access to cable services,” he explained. “Access to DTH services is not as easy, so it is all about convenience. The moment when it can change is when we will bring new services. This will happen when we start to offer services such as personal video recorders (PVRs)/digital video recorders (DVRs), multiroom boxes, etc.” Polsat had its own cable systems with 100,000 subscribers but it decided to sell them to concentrate on its DTH business.

Financial Markets

The operator also could go to the financial markets at some point. German pay-TV operator Premiere is likely to be the next major pay-TV operator to go to the financial markets in Europe. On this subject, Libicki said, “It is premature to talk about it at this stage, but in a few years time – why not? You do have to invest a lot of money into a DTH business at every stage. You have things coming such as PVRs, so you are always investing in the technical side of the business. There are things such as HDTV and TV over DSL. Capital markets could be, therefore, seen as a good opportunity in the future.”

As competition heats up in the Polish market, more creative sales and marketing strategies will be deployed. The operator has been influenced by what has been going on in the mobile sector. It is already deploying a unique strategy in terms of the way it sells STBs.

“We have a kind of a prepaid STB. You sell the STB as Free-to-Air (FTA), with a prepaid six-month subscription to Polsat. After the six months, you can then either pay for a Polsat subscription or just have FTA. It was a very simple strategy,” he said. “There is great potential for offers such as this in the market. We can really tap into the FTA market. We expect the number of subscriptions to grow significantly through this effort. We hope we can turn 60 percent of the people who buy this offer into paying subscribers.”

The operator also is in the early stages of looking at a PVR strategy. While others in Europe — like BSkyB, Canal Satellite and TPS in France — already are aggressively rolling out DVR offerings, Polsat hopes to give its consumers this option in the near future. “We would like to offer our subscribers two different STBs. That is the direction we would like to take in terms of the development of the platform. A very simple zapping box will be one of them, and the second one will be a more sophisticated box, such as a PVR,” Libicki said. “When we will do it? We have already started to think about it, and we are looking to create the right model for it. It will happen when the market is ready for it, but not earlier than by the end of next year. We definitely see PVR boxes are the future.”

Piracy also has been an issue for the operator. Libicki admitted to problems in this area, but he also noted there needs to be more cooperation between the different players involved. “Piracy needs different actions, which have to be done in parallel,” he said. “You need the legislation, which has to be effective. It also requires a lot of effort from the broadcasters operators, as we all have to educate the police and the authorities on how to deal with piracy. The most important component is to have a system that is not vulnerable.”

Breaking The 500,000-Sub Barrier

Despite the increased competition, Polsat continues to be a rising star of pay-TV in Europe. It is also proof that new players can succeed in tough market conditions. In terms of challenges Polsat faces during the next 12 months, Libicki says, “Our goal is to have 500,000 subscribers in 12-months time. In terms of average revenue per user, we want to build that up with different levels of packages. We want to keep the low price of the basic subscription and encourage consumers to take more services on the back of that (via premium packages and PPV). Three years ago people, did not rate our chances of survival. Now we have 40 percent of that market. My goal is to be on the same level as our competitor, Cyfra +.”

–Mark Holmes

Contact: Beata Paczynska, Cyfrowy Polsat, e-mail: [email protected].