MTG CEO: Satellite Pay-TV Market Has Peaked In Nordic Region

[Satellite News – 2-19-08] Satellite pay-TV has peaked in terms of subscribers in the Nordic region, according to Modern Times Group (MTG) CEO Hans-Holger Albrecht. MTG owns Viasat Broadcasting, which operates a Viasat-branded direct-to-home (DTH) platform.
    Both major DTH platforms in the region, Viasat and Canal Digital, saw their satellite pay-TV subscriber numbers decline between September and December. Viasat had 714,000 premium subscribers at the end of December, down from 717,000 at the end of September Canal Digital fared no better, closing 2007 with 932,000 subscribers, down from 935,000 at the end of September.
    “We have a mature market,” Albrecht said. “The growth potential for satellite is now limited. The whole trend for us is going more into the ARPU [average revenue per user] game. You see the competition from new distribution platforms from digital terrestrial television (DTT) and broadband. This is reflection of the changing dynamics of television. Scandinavia has some of the most competitive TV markets anywhere. We have cable, DTT, IPTV, satellite, etc. The satellite market has peaked. We believe future growth in the market will be on other distribution platforms such as broadband.”
    The onset of tough competition from IPTV and DTT platforms means satellite is under more pressure then it has been in a long time, said Albrecht. “IPTV will be a very good business in the future. This is positive. It will be driven by the telcos. What you see is that the trend. You are going to have more and more distribution platforms towards the end consumer. Therefore, it is much more complex and you have to be very flexible in terms of how you reach the customer.”

Other Revenue Prospects

    With the numbers of DTH subscribers stagnating and the number of competitors growing, the challenge is to find new ways to generate revenues from their existing subscriber bases. “The biggest challenge is the pay-TV business, particularly with the onset of broadband and online TV,” Albrecht said. “We want to continue to grow and start implementing things that we will need to have a successful future.”
    In January, Viasat launched high-definition (HD) services, but Albrecht believes it will take a while before there is significant uptake of HD services in the region. “As much as we love to talk about HD, the whole battleground is content,” he said. “HD is a trend you have to go for, but the main battleground will still be in standard pay-TV. I think we will cross-benefit by both satellite platforms offering HD services. That will help the education process. It takes two to three years before you see a significant uptake in the product. That is what we have seen on the personal video recorder side.”
Viasat also looking at other ways to generate revenues, launching satellite pay-TV services in the Baltic region and preparing to launch services in Ukraine in the first half of the year. Albrecht does not rule out entering into other new markets in Eastern Europe. “We are always looking at opportunities in Eastern Europe,” he said. “In some markets the opportunity has gone, but we are still looking. We have to find the right target for the right price in the right circumstances. You have to look at the competition.”
    Another area where the company could play more of a role is in mobile TV. Viasat already is working on trials with mobile phone companies, but Albrecht is not yet sure which business model is likely to be successful. “It will be a good space,” he said. “What isn’t clear is how we are going to make money on it. So whether the business model is a free service driven by advertising or subscription, this all remains to be seen. It is another way to reach customers. … I think it will be advertising driven or something integrated to a pay-TV system where Viasat satellite customers can have access to services via their mobile.”