As the traditional cable subscription is giving way to new ways of watching TV and video, operators will start seeing their revenues from TV services fall as well from 2020.
The Dutch TV market reached its peak in early 2015 at nearly 7.9 million subscribers and a penetration over 100 percent of households. Since then the number of subscribers has been falling gradually each quarter, to reach just under 7.4 million at the end of June 2019, equal to around 93 percent of households, the Dutch Television Market Q2 2019 report from Telecompaper shows.
The decline is due to a number of factors. The widespread availability of apps and online platforms for watching TV has meant fewer households take a second TV subscription, for their main residence or a holiday home. Since the launch of Netflix in the Netherlands in 2013, other OTT services have followed, which some consumers may consider a cheaper or better alternative to a standard TV subscription. In addition, a new generation of ‘cord nevers’ is emerging – young people who consume video mainly online and don’t see the need for a TV or subscription service.
Telecompaper expects these trends to continue, leading to a further decline in TV subscribers. The market researcher’s latest quarterly Dutch Television Market report forecasts a CAGR of -0.8 percent for TV subscriptions in the five years to 2023, leading to around 7.1 million connections and a household penetration of less than 88 percent.
Despite the fall in TV subscribers, revenues for the TV providers continue to grow, due to regular price increases. Higher prices are supported by the switch to all-digital services, bringing additional features such as HD/4K, extra channels and apps, and interactive options such as catch-up, on-demand and cloud recording. In the second quarter of 2019, TV revenues rose 3 percent year-on-year to EUR474 million, on a customer base down 0.5 percent from a year earlier.
Nevertheless, Telecompaper expects TV revenues to start to decline as well, from 2020. The market researcher forecasts a CAGR of -0.7 percent in TV revenues over five years, to reach just under EUR 1.8 billion in 2023.
“Competition from new OTT services, such as the upcoming launch of Disney+ in November, will start to weigh more heavily on traditional TV services,” said Kamiel Albrecht, Telecompaper research analyst and author of the TV market report.
“The wholesale cable regulation may also bring new competitors to the market and put further pressure on prices, meaning annual rate increases can no longer offset the drop in subscribers.”