Pay-TV Offers Mixed Fortunes For Operators

As 2002 comes to an end, it is time to assess how satellite pay-TV operators are faring in Europe. As expected, BSkyB in the United Kingdom continues to blaze a trail in Europe. At the end of September, it had over 6.3 million subscribers and appeared to be well on track to reach its goal of over 7 million subscribers by the end of 2003. At this rate, it would likely reach 7.1 million subscribers at the end of 2003. This year has been a particular good year for BSkyB and it has been able to profit from the demise of ITV Digital as well as the struggles of cable operators NTL and Telewest.

In Spain, the situation has been less clear cut. The Spanish pay-TV platforms have shown few encouraging signs in 2002. Sogecable’s Canal Satelite Digital (CSD) in fact had fewer subscribers in September than it did of March of this year, while its rival Telefonica’s Via Digital increased its subscribers by only around 3,000 over the same period. There remains a piracy problem in Spain, and the merger between the two platforms could affect consumers decisions in terms of pay-TV. But, the overriding feeling is that pay-TV has yet to really take-off in Spain. Both Via Digital and CSD have found 2002 to be a difficult year. The merger between the two platforms is likely to be completed later this year, given the combined platform just over two million subscribers.

In France, Canal Satellite has performed fairly strongly in 2002. It has increased its subscriber base by 120,000 in the first nine months of the year. It now has 2,159,000 subscribers, well ahead of its rival TPS. Canal Satellite will also be strengthening its French football offer between 2004 and 2007 after Canal+ outbid rival TPS for the rights in the latest auction (see Interspace 757). The French market is one of the few left where there are two satellite platforms. Deals in Italy (Telepiu/Stream) and Spain (Via Digital/CSD) are likely to go through leaving France as the only major territory with two DTH satellite platforms. Canal Satellite and TPS have 3.3 million subscribers between them.

In Italy, Telepiu has had a difficult year, with the problem of piracy still prevalent. Although Interspace was unable to obtain the statistics for the end of September 2002, it understands there has been significant growth from the 1.3 million subscriber figure reported at the end of June. A lot of this is the result of the new implementation of the new Canal+ Technologies smart card. Telepiu is likely to have between 1.4 million and 1.5 million subscribers, showing a dramatic increase in the period between June and September compared to previous quarters.

In Germany, Premiere has been undergoing somewhat of a revival in recent months and its breakeven target of 2.9 million subscribers no longer looks like a pipe dream. Despite previously being hamstrung by expensive movie rights deals, Premiere CEO Georg Kofler has done a remarkable job in renegotiating these deals and slashing Premiere’s costs, while at the same time still growing the subscriber base in Germany, a pretty remarkable achievement. The statistics show that Premiere had a tough start in 2002, but its subscriber rates are now on the increase.

In the Nordic regions, Modern Times (MTG) has shown steady subscriber growth in 2002. It has increased its number of pay-TV subscribers 7 per cent in the nine months ended Sept. 30, 2002. The Nordics are showing similar growth figures to the UK market in terms of growth. The major challenge for MTG this year has been the problem of smart card piracy. MTG has hinted in a recent edition of Interspace (Issue 756) that it may change its conditional access vendor Viaccess. It remains to be seen what impact a change would have in terms of subscriber growth. Still, with many customers across Europe using pirate smart cards, there is still great potential, particular in markets such as Spain and Italy where piracy has been particularly prevalent.

What these statistics show is how far ahead BSkyB is here. It has shown sustained subscriber growth for numerous quarters now and its figures compared to other pay-TV operators are colossal. In France, the two operators combined have around half of BSkyB’s overall subscriber figure. It will be interesting to see how Sky Italia (Telepiu/Stream) performs in Italy and whether it can have the same level of success as BSkyB in the UK. In Spain, the combined CSD/Via Digital platform will need to perform much better in 2003 than the two platforms performed this year.

In France, Canal Satellite hopes its huge investments in football rights – somewhat ironic given the price of football rights everywhere else has gone down – will lead to further growth. For TPS, it faces a different challenge. It must now grow its subscriber numbers without having key football rights between 2004 and 2007. While it could be argued that anyone who wanted football would subscribe to Canal anyway, it is still likely to have an impact.

As we enter 2003, all of the operators face different challenges. With some markets already showing signs of maturation, it will be interesting to see what levels of subscriber growth we’ll see in 2003.

–Mark Holmes