Whisper it if you must, but the digital TV sector has finally begun to talk about the possibility of a slowdown, writes Julian Clover.
With every hourly bulletin it feels like we are slipping further into recession, the curse of 24-hour newscycle that began with the problems at the Northern Rock building society and led to a run on Robert Peston, the BBC’s harbinger of doom.
Whereas during IBC and later at CTAM Europe it felt like the digital TV sector was in some sort of a bubble, now pricks are beginning to dent the surface. The past seven days have seen a collection of surveys and financial reports that have challenged what has been the collective wisdom that pay-TV is a cheap form of entertainment and capable of withstanding the financial storms around us.
The difference with this recession, there is no point in concerning ourselves with counting two or more consecutive quarters of negative growth, is that more people now have pay-TV. The early adopters and entrants that later shored up the market have been joined by a new group of people that have made their decision as a result of impending analogue switch-off. Could these people be softer than those who went before them?
This week Continental Research issued a report that said Sky subscribers would expect to pay less for their content, with the resultant effect on subscriber revenues, then investment banker Collins Stewart said Sky would miss its target of 10 million subscribers in 2010. However, this runs counter to comments by Canal+ chief Bertrand Meheut, who said the French pay-TV platform was actually seeing a slight increase in subscriber numbers.
Point Topic, which provides forecasts on the number of broadband connections, says it estimates numbers to be 20% down on the 390,000 installations it was anticipating. Local loop unbundling – where ISPs such as Sky and Carphone Warehouse install their own equipment in BT’s telephone exchanges – is the main driver growth, adding 323,000 lines in the quarter. Point Topic estimates that Virgin Media may have added another 60,000 cable modem customers while BT and smaller players actually lost about 70,000 net.
Large parts of the business are now owned by private equity, and while by its nature there’s no share price to worry about, there is the lack of credit that took us here in the first place. It makes sense then that Teleste has reduced its forecasts based, in part, on the equity businesses reducing their investment.
NDS also signalled a fall in profits with the suggestion that operators were recycling boxes, though one manufacturer told me that this had always been the case in some markets, and in others you cannot remove a box that a customer has actually purchased.
Remember, cheap form of entertainment.
