A string of low cost pay-TV service launches have stimulated the Central and Eastern European TV sector to such an extent that more than half of the region’s homes have signed up to pay-TV services.
As the region’s TV business enters a dynamic new growth phase, Ovum forecasts that annual pay-TV revenue in the region will be worth nearly $11 billion by 2019.
Adam Thomas, Ovum’s Lead Analyst for Global TV Markets said: “Piracy and low levels of disposable income have been holding back the TV business in Eastern Europe for years. But the subscriber scale generated by these new services is now being exploited by the rollout of more sophisticated TV services. The trend we have found is a focus towards monetization and away from purely growing subscriber numbers.”
The region provides a complex mix of markets at various stages of progress. As part of its new research, Ovum has produced a “maturity index” to analyze where each market sits in terms of development. This found a wide range of position points ranging from mature markets, such as the Czech Republic and Poland, to fast emerging nations including Russia and Serbia.
According to Thomas: “Even in territories like Ukraine and Slovakia, where pay-TV subscriber growth is limited, Ovum’s research has found significant revenue growth. This is likely to be replicated across the region with operators working creatively to generate incremental revenue from existing clients by improving both content and service delivery.”
Ovum’s Oleksiy Danilin, who tracks media markets across Eastern Europe, adds: “Russian satellite service Tricolor is one of the shining examples of this trend. As the rate of subscriber additions tails off, this company will maintain revenue growth by offering subscribers premium services such as movie and HD channel bundles, which should maintain healthy ARPU growth over the next few years. ”
The Tricolor experience is illustrative of a wider trend within the region’s pay-TV sector. The years of numerous, new low-cost service launches are now in the past and, with the market now maturing, Ovum forecasts that ARPU levels, which had been experiencing an ongoing decline, will now enjoy consistent growth throughout the forecast period (see Figure) from US$9.07 per month in 2013 to US$9.90 in 2019.
“Ovum believes that the subscriber scale generated by these low-cost initiatives is now ripe for exploitation via the rollout of more sophisticated TV services. With the focus moving towards monetization and away from growing subscriber numbers, Ovum forecasts that pay-TV growth will be steady rather than spectacular going forwards and will reach 61% of TV homes by 2019,” concludes Thomas.