Romania is undoubtedly one of Central and Eastern Europe’s toughest TV markets.
A brief visit to the country earlier this week confirmed just as much to me. It also gave me useful insights into the many issues faced by the local industry and how these can be addressed.
In a market where pay-TV penetration now stands at over 90% – one of the highest figures anywhere in Europe – the leading providers of such services remain RCS&RDS (aka Digi), Telekom Romania (formerly known as Romtelecom, before a highly successful re-brand last year) and UPC Romania. Other players include Orange Romania and Digital Cable Systems (DCS), with Vodafone soon also likely to enter the fray.
However, it’s not just about pay-TV, with the big three certainly providing a much wider range of services. UPC Romania, for instance, now offers its subscribers internet access at up to 500 Mbps, while both RCS&RDS and Telekom Romania in some locations provide 1 Gbps – speeds that put such advanced markets like the UK to shame.
All the leading players also operate OTT services and compete in the acquisition and provision of content.
In the case of sports rights, Telekom Romania arguably has an advantage over its rivals, holding them exclusively for, among others, the Champions League, F1 and NBA. However, it shares some rights with RCS&RDS, which in turn considers itself the market leader in terms of content, now operating at least 15 proprietary channels.
These include Digi 24, a popular news-based service that has must-carry status on Romanian cable networks.
Must-carry is both a controversial and political issue, with a list of services awarded the status being drawn up at the beginning of each year. Not only is the current number (26) considered excessive, but also most of the services are anything but popular and in fact attract low audiences.
The name of the game, certainly in the case of the big three, is investment. UPC Romania, for instance, expects to spend some €35 million in 2016 and to reach an additional one million households in the next 3-5 years.
However, with such large sums being committed towards improving infrastructure and offers, little or no money is finding its way back to shareholders. This is clearly an untenable situation and likely to speed up consolidation, with the big three continuing to buy smaller operators.
In a nutshell, the leading players are finding themselves having to offer more and more in what is a low ARPU market in order to retain their customers. They are also becoming increasingly creative with what they offer in order to steel a march on their rivals.
Piracy is also a huge problem, as is the general unwillingness of customers to pay more for additional services. Indeed, as one stakeholder told me, only 30-40% are prepared to do so, with the challenge being to convince the rest.
On the plus side, Romania is a market that has always been open to new ideas and this is something not lost on providers. It was no coincidence, for instance, that Orange chose the country to give a debut to its TV stick earlier this year.
While the future is always hard to predict, one can safely assume that Romania’s market will continue to grow over the next few years. Consolidation is a given, and the industry will in due course be almost indistinguishable, certainly in the services it offers, to those available in most advanced West European countries.
