Direct-to-home satellite operators in Eastern Europe are adding subscribers faster than their cable peers, with satellite growth of 64% between 2008 and 2012 compared to 30% for total pay-TV. SNL Kagan analysis indicates a key driver behind this growth is improved affordability of low-cost entry packages.
A clear example of low-cost packages boosting subscriber growth in Eastern Europe is Russian heavyweight Tricolor TV, which offers a free 10-channel package to households buying the set-top box. This strategy has amassed a total base of 11 million users, of whom 8.8 million take a true pay package. Using a bait package to drive upsell opportunities has worked, with the number of paying subscribers up 190% over the last four years, boosting the operator’s market share in Russia from 17.6% to 35.3%. Tricolor’s low-cost Optimum pack costs R600 per year, equating to 1.2% of the market’s per-capita gross national income purchasing power parity.
A similar trend is discernible with Poland’s top operator, Cyfrowy Polsat, which grew subscribers 170% between 2006 and 2010 via a low-cost entry package which came to market at a promotional rate of PLN2 per month and remained below PLN10 per month through 2010. Since 2010, growth has slowed as pay-TV penetration in Poland has approached 90%. As of end-2012, Polsat controlled more than 30% of the local market, with 800,000 subscribers taking the affordable Mini HD pack, generating PLN13.4 in average revenue per user.
Combined, Tricolor and Cyfrowy Polsat controlled 12.4 million subs, or 49% of the regional DTH market as of end-2012.
Basic packs have not had the same growth impact on cable operators in Eastern Europe. During the last four years the region’s cable subscriber base grew by 3%, compared to 64% growth for DTH. The discrepancy in performance stems from the significant difference in affordability between the entry packages offered by DTH and cable operators.
