What lessons, if any, can the pay-TV industry in Central and Eastern Europe learn from recent developments in Greece?
This may at first glance seem like a strange question. Despite its close proximity to the region, Greece’s own pay-TV industry is and has always been quite different to those in CEE. First and foremost is the absence of a cable sector, a feature it shares with very few other countries in Europe, one other notable exception being Italy.
Secondly, pay-TV penetration in Greece, currently around 24%, is much lower than in the CEE as a whole. In nearby Romania, for instance, it is close to 100%, while even in the Czech Republic, which probably has the lowest in the region, it exceeds 40%.
Thirdly, there are far fewer providers of pay-TV services than in most CEE countries. The market serves some 950,000 subscribers and is dominated by OTE (Cosmote TV) and Forthnet (Nova), with other operators including Vodafone and Cyta.
On the other hand, there are links between Greece’s pay-TV market and those in CEE, the most obvious one being OTE’s ownership of Telekom Romania. Yet while the latter’s TV business faces intense competition and is growing slowly, OTE’s domestic operation, like other pay-TV services in Greece, has to contend with even more issues.
The most pressing of these is the imposition of a 10% tax on pay-TV services last year. This, coupled with 24% VAT charged on this tax, has had an adverse effect on the market, with Forthnet arguably more affected than OTE.
Indeed, the number of pay-TV subscribers in Greece fell in the first half of this year and it would be no surprise if the trend were repeated in the second half.
Piracy is also having a major impact on pay-TV in Greece, with up to 100,000 homes receiving services illegally and the market losing up to $20 million a year as a result.
Greece is also not immune to the carriage disputes that seem to flare up in Europe on a regular basis these days. Just this week we reported that OTE’s Cosmote TV would no longer offer its subscribers channels from Discovery after the two parties failed to reach an agreement.
On a positive note, we have also reported on the possibility of the telco Wind Hellas signing a content agreement with Forthnet and thereby entering the pay-TV market.
So are there any lessons from the Greek experience? Perhaps the most important one is that pay-TV, like any other industry, can only flourish when the conditions are right for it to do so.
Clearly that is not the case in Greece right now, but hopefully the situation will improve in the near future.