Unlike US peers who are currently hurting from increased cord-cutting, Western European pay-TV firms are successfully fighting off the challenge posed by over-the-top offerings, says research from Ovum.
Indeed, not only are the region’s pay-TV firms taking the fight back to OTT companies, they are also, suggests the Western Europe: Pay-TV & Free-To-Air Forecasts to 2021 report, seeing off the region’s strong free-to-air TV industry. Ovum believes that pay-TV in Western Europe is increasingly reacting credibly to not just the OTT threat but also the opportunities offered by online distribution. It added that consumer demand for more flexible viewing options was being addressed by streaming services with linear TV, enhancing on-demand offerings already available.
Ovum calculates that there were 98 million pay-TV subscribers in Western Europe at the mid-point of 2016 and forecasts that seven million more will be added by the end of 2021, taking the total to 105 million. The 100 million-subscriber barrier will likely be reached next year. It also forecasts that by 2021, pay-TV revenues will have likely grown by almost 12% over the previous six years, rising from $33.9 billion to $37.9 billion. During the same period, digital TV household numbers will likely have increased from 159 million to 180 million, meaning that digital TV penetration would have risen from 91% of TV households to 99%.
“Western European pay-TV operators have invested in new technologies to create an impressively sophisticated operating environment,” explained Adam Steel, Ovum’s TV analyst specialising in Western European markets. “Value added services like bundled VOD catalogues, DVRs and HD are keeping existing clients happy enough to retain the service but also, crucially, they are still attracting new subscribers too. Great content remains critical to success, but that must be supplemented by customer experiences which offer significant differentiation from those offered by lower cost, in particular OTT, alternatives.”
Another interesting facet for the region was that unlike others it was heading off the advance of Netflix. Senior TV analyst Tony Gunnarsson at Ovum added: “No-one should underestimate the challenge posed by Netflix and other OTT services. But our research shows that Netflix’s growth is slowing in mature SVOD markets such as the UK and Scandinavia, indicating that after an initial growth spurt in each market its rate of progress begins to decelerate. Crucially… SVOD subscribers are overwhelmingly pay-TV subscribers in many markets: SVOD and pay TV are not ‘either/or’ propositions. Audiences are increasingly using both.”