Pay TV Markets and Players the Market's Transition to OTT

Home , Icflix

FUTURE TV & DIGITAL CONTENT Project Leader Jacques BAJON M19250MRA – December 2019 +33 (0)4 67 14 44 61 [email protected]

Pay TV markets and players The market's transition to OTT

Sample

www.idate.org Jacques BAJON, Consultant, Media – Telecoms Business Unit Project Leader

Over the course of his 15 years of experience, Jacques Bajon has become an expert in media economics and the internet’s impact on content. His assignments are focused primarily sector-specific, economic and strategy reports devoted to television and digital media and their distribution. He also tracks new media ecosystems, how player strategies are evolving and telcos’ convergence issues. Jacques works with private sector enterprises and public operators, in France and around the world. Jacques holds a Masters in International economics from the Université Paris X, as well as a Masters in Innovation Management (Toulouse School of Management).

Contributor Pierre VOISIN, Consultant, Media – Telecoms Business Unit

Enlighten your digital future! © IDATE DigiWorld 2019 – p. 2 Pay TV The market's transition to OTT

Synopsis & Questions cles Companies referenced

Is pay TV stuck in an inexorable decline? Is SVOD the miracle cure? Have veteran Players profiled Other players become aware of the changing tide and adapted their strategies accordingly? . Airtel . NBC Universal Who will be the big winners in this massive migration to online (OTT) services? . AT&T . Alibaba . Netflix . Amazon . NTT This report from IDATE DigiWorld tackles all of these questions by examining both . Canal+ . markets and players. America Móvil . Oi . Apple . Ooredoo . Comcast It begins with a detailed look at subscription TV & video markets: how TV and SVOD . Baidu . Orange subscriptions are progressing on each type of network (2015 – 2023), by player (2015 . BeIN . . Dish TV SFR – 2019), and in terms of service revenue (2015 – 2023). . BT . Shanghai Media Group . . This examination is performed for both the main geographic regions and the key . Multichoice China Telecom Sky . markets in each of these regions: Com Hem . Sky PerfecTV . . Deutsche Telekom . StarTimes - The United States Nordic Entertainment Group . Disney . StarzPlay - Europe (Germany, Spain, France, Italy, the UK, Scandinavia) . OSN . Dish Network . STC - Sub-Saharan Africa (South Africa) . Du . TataSky - North Africa/the Middle East . Vodafone . Etisalat . Telefónica - Asia-Pacific (China, India, Japan) . HBO . Televisa - Latin America (Brazil) . HotStar . Telia Next, it explores how key players in each region are responding strategically to the . Hulu . Tencent changing landscape. . Icflix . UnityMedia . Jupiter . Viasat The final chapter delivers a synthesis of the core issues and challenges, for both . Liberty Global . Videocon markets and players’ positioning. . Maxdome . WarnerMedia . MBC . Zap TV . Mediaset . MTG

Enlighten your digital future! © IDATE DigiWorld 2019 – p. 3 Table of contents Pay TV: The market's transition to OTT

1. Executive Summary 7 3. How leading players are responding 42 1.1. Pay TV under pressure, SVOD needs to pick up the slack 8 3.1. AT&T 43 1.2. Player strategies accelerating the transition 9 3.2. Canal+ 45 3.3. Comcast 47 2. Pay TV and SVOD market dynamics 10 3.4. Dish TV 49 2.1. The United States 11 3.5. Multichoice 51 2.2. Europe 13 3.6. Nordic Entertainment Group 53 2.2.1. Germany 14 3.7. OSN 55 2.2.2. Spain 16 3.8. Vodafone 57 2.2.3. France 18 2.2.4. Italy 20 4. Conclusion 59 2.2.5. The UK 22 4.1. Pay TV access markets 60 2.2.6. Scandinavia 24 4.2. A pay TV market in transition 61 2.3. Sub-Saharan Africa 26 4.3. Revising the definition of subscriber 63 2.3.1. South Africa 28 4.4. Redefining service access models 64 2.4. North Africa/the Middle East 30 4.5. Evolving business models 65 2.5. Asia-Pacific 32 4.6. Player strategies accelerating the transition 66 2.5.1. China 33 2.5.2. India 35 About IDATE DigiWorld 67 2.5.3. Japan 37 2.6. Latin America 39 2.6.1. Brazil 40

Enlighten your digital future! © IDATE DigiWorld 2019 – p. 4 Tables & Figures Pay TV: The market's transition to OTT

. Correlation between market growth and pay-TV penetration rate 8 . Pay TV and SVOD revenue growth in Sub-Saharan Africa, 2015 – 2023 26 . Pay TV and SVOD revenue growth forecasts for the United States and Europe (CAGR 2019-2023) 8 . Pay TV leaders' market share in Sub-Saharan Africa, in 2018 27 . Progression of TV subscribers and SVOD subscriptions in the United States, 2015 – 2023 11 . Progression of TV subscribers and SVOD subscriptions in South Africa, 2015 – 2023 28 . Pay TV and SVOD revenue growth in the United States, 2015 – 2023 11 . Pay TV and SVOD revenue growth in South Africa, 2015 – 2023 28 . Progression of TV and SVOD subscribers by operator in the United States, 2015 – 2019 12 . Progression of TV and SVOD subscribers by operator in South Africa, 2015 – 2019 29 . Progression of TV subscribers and SVOD subscriptions in Europe, 2015 – 2023 13 . Progression of TV subscribers and SVOD subscriptions in North Africa/the Middle East, 2015 – 2023 30 . Pay TV and SVOD revenue growth in Europe, 2015 – 2023 13 . Pay TV and SVOD revenue growth in North Africa/the Middle East, 2015 – 2023 30 . Progression of TV subscribers and SVOD subscriptions in Germany, 2015 – 2023 14 . Pay TV leaders' market share in North Africa/the Middle East, in 2018 31 . Pay TV and SVOD revenue growth in Germany, 2015 – 2023 14 . Progression of TV subscribers and SVOD subscriptions in Asia-Pacific, 2015 – 2023 32 . Progression of TV and SVOD subscribers by operator in Germany, 2015 – 2019 15 . Pay TV and SVOD revenue growth in Asia-Pacific, 2015 – 2023 32 . Progression of TV subscribers and SVOD subscriptions in Spain, 2015 – 2023 16 . Progression of TV subscribers and SVOD subscriptions in China, 2015 – 2023 33 . Pay TV and SVOD revenue growth in Spain, 2015 – 2023 16 . Pay TV and SVOD revenue growth in China, 2015 – 2023 33 . Progression of TV and SVOD subscribers by operator in Spain, 2015 – 2019 17 . Progression of TV and SVOD subscribers by operator in China, 2015 – 2019 34 . Progression of TV subscribers and SVOD subscriptions in France, 2015 – 2023 18 . Progression of TV subscribers and SVOD subscriptions in India, 2015 – 2023 35 . Pay TV and SVOD revenue growth in France, 2015 – 2023 18 . Pay TV and SVOD revenue growth in India, 2015 – 2023 35 . Progression of TV and SVOD subscribers by operator in France, 2015 – 2019 19 . Progression of TV and SVOD subscribers by operator in India, 2015 – 2019 36 . Progression of TV subscribers and SVOD subscriptions in Italy, 2015 – 2023 20 . Progression of TV subscribers and SVOD subscriptions in Japan, 2015 – 2023 37 . Pay TV and SVOD revenue growth in Italy, 2015 – 2023 20 . Pay TV and SVOD revenue growth in Japan, 2015 – 2023 37 . Progression of TV and SVOD subscribers by operator in Italy, 2015 – 2019 21 . Progression of TV and SVOD subscribers by operator in Japan, 2015 – 2019 38 . Progression of TV subscribers and SVOD subscriptions in the UK, 2015 – 2023 22 . Progression of TV subscribers and SVOD subscriptions in Latin America, 2015 – 2023 39 . Pay TV and SVOD revenue growth in the UK, 2015 – 2023 22 . Pay TV and SVOD revenue growth in Latin America, 2015 – 2023 39 . Progression of TV and SVOD subscribers by operator in the UK, 2015 – 2019 22 . Progression of TV subscribers and SVOD subscriptions in Brazil, 2015 – 2023 40 . Progression of TV subscribers and SVOD subscriptions in Scandinavia, 2015 – 2023 24 . Pay TV and SVOD revenue growth in Brazil, 2015 – 2023 40 . Pay TV and SVOD revenue growth in Scandinavia, 2015 – 2023 24 . Progression of TV and SVOD subscribers by operator in Brazil, 2015 – 2019 41 . Progression of TV and SVOD subscribers by operator in Scandinavia, 2015 – 2019 25 . Progression of TV subscribers and SVOD subscriptions in Sub-Saharan Africa, 2015 – 2023 26

Enlighten your digital future! © IDATE DigiWorld 2019 – p. 5 Tables & Figures Pay TV: The market's transition to OTT

. Progression of AT&T TV subscribers 43 . Progression in the number of households in Europe that have at least one SVOD subscription 2015 – 2023) 62 . Progression of AT&T Video Entertainment operating revenue 43 . Estimated share of households in Europe and in the United States that have at least one SVOD . Snapshot of the US media landscape 44 subscription in 2019 63 . Progression of Canal + Group subscribers, 2H 2018- 2H 2019 45 . Player strategies accelerating the transition 66 . Progression of Canal+ EBIDTA , 2H 2018- 2H 2019 45 . Breakdown of Canal+ revenue, 2H 2019 46 . Progression of Comcast Group subscribers 47 . Progression of Comcast revenue by segment 47 . Comcast’s share of the pay TV market, by country, in 2018 48 . Progression of Dish TV subscribers 49 . Breakdown of Dish TV revenue in 2018 49 . Progression of Dish TV TV subscribers 50 . Progression of MultiChoice TV subscribers 51 . Progression of MultiChoice revenue and ARPU 51 . Multichoice subscriber mix in the rest of Africa 52 . Progression of Nordic Entertainment Group subscribers 53 . Progression of Nordic Entertainment Group revenue 53 . Progression of OSN subscribers 55 . Progression of OSN financials in 2018 55 . Pay TV leaders' market share in North Africa/the Middle East, 2018 56 . Vodafone’s main cable acquisitions 57 . Progression of Vodafone TV subscribers 57 . breakdown of pay TV subscribers in Germany by operator 58 . Progression of pay TV revenue by country/zones (CAGR 2015/2019) 61 . Progression in the number of households in Europe and in the United States that have at least one SVOD subscription, 2015-2023 62 . Pay TV and SVOD revenue growth forecasts for the United States and Europe (CAGR 2019-2023) 62

Enlighten your digital future! © IDATE DigiWorld 2019 – p. 6 Pay TV and SVOD market 02 dynamics

Enlighten your digital future! © IDATE DigiWorld 2019 – p. 10 2.6. Latin America Mexico and Brazil set the (bleak) tone

Progression of TV subscribers and SVOD subscriptions in Latin America, 2015-2023 The region’s main markets, Brazil and Mexico, are struggling when it (million) comes to pay TV 80 . 70 Both markets have lost subscribers over the past two years and, even if a 0.8 1.1 1.3 2.5 3.6 5.2 7.0 8.7 10.5 recovery is possible, it will remain slight. The pay TV penetration rate is 60 expected to stagnate at around 40% up to 2023. 50 29.8 31.6 32.4 32.2 32.7 33.2 33.2 33.1 32.9 40 37.9 35.3 29.5 32.6 DirecTV/Sky Mexico and America Móvil (Claro) represent 50% of the 30 26.3 22.8 region’s TV subscribers 20 31.2 19.1 29.9 15.5 30.7 30.3 30.0 29.8 29.7 29.3 29.0 10 11.9 . In 2018, America Móvil had 21.5 million subscribers in Latin America, which 0 marks a decrease of 88,000 in a single year. This decline continued on 2015 2016 2017 2018 2019e 2020f 2021f 2022f 2023f through 2019, with a 1.9% decrease YoY in Q2 2019. Satellite Cable IPTV SVOD . After several difficult years, DirecTV (AT&T) gained 250,000 subscribers in 2018, mainly prepaid, to reach a total 13.8 million subscribers. Meanwhile Sky Source: IDATE DigiWorld, Pay-TV Markets and Players, December 2019 Mexico (AT&T 47.1%), lost 200,000 subscribers during that time, bringing its total down to 7.8 million subscribers. These figures will, at best, hold steady in Pay TV and SVOD revenue growth in Latin America, 2015-2023 (billion EUR) the coming years. 20 16.5 16.8 14.9 15.5 16.0 13.7 14.5 Netflix dominates the SVOD market 15 12.5 10.9 . SVOD products are regional, and divvied up between heavyweight American services (Netflix, Amazon, HBO) and products sold by local leaders Blim 10 (Televisa), Claro Video (America Movil) and Movistar Play (Telefónica) 5 2.1 2.3 2.5 2.7 0.9 1.1 1.4 1.6 1.9 . Netflix is expected to maintain its lead in the coming years, despite the rise of Amazon Prime Video. Only Claro Video (1.35 EUR a week) appears to be a 0 2015 2016 2017 2018 2019e 2020f 2021f 2022f 2023f serious local challenger. Pay-TV SVOD

Source: IDATE DigiWorld, Pay-TV Markets and Players, December 2019

Enlighten your digital future! © IDATE DigiWorld 2019 – p. 42 3.3. Comcast (1/2) Comcast doubles its TV subscriber numbers with the acquisition of Sky in Europe, but operating figures disappoint

Progression of Comcast Group subscribers (million) Decrease in subscribers and revenue 50 44.97 45.02 45.05 45.22 45.16 45.13 45.45 45.59 45.58 45.66 40 Declining premium TV subscriber numbers 30 . Comcast continues to suffer TV subscriber losses in the United States, 20 losing 209,000 subscribers in Q2 2019 and 430,000 YoY. 10 . Interestingly, the take-up ratio for video services in those locations where Comcast operates has been decreasing steadily (37.2% in Q2 2019 versus 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 38.5% one year earlier). Comcast Sky TV Sky Now TV Total . Sky is the pay TV market leader in Europe, and the UK’s second largest Internet service provider. Although subscriber numbers are increasing Source: IDATE DigiWorld, Pay-TV Markets and Players, December 2019 steadily (+304,000 in Q2 2019) growth is now being spurred chiefly by OTT video products, and especially NOW TV in the UK, and not by premium Progression of Comcast revenue by segment (million USD) satellite subscriptions. NBC Universal, Comcast Video, Comcast Internet, Sky . NOW TV reached 1.93 million subscriptions in the UK in Q2 2019, or $10 000 $9 497 $9 395 $8 774 310,000 more than the previous quarter. These numbers are nevertheless $9 000 $8 596 $8 290 $8 273 $8 313 $8 206 still well below those of UK market leaders Netflix (11.62 million) and $7 826 $7 946 Amazon (5.86 million). $8 000

$7 000 Entertainment segment revenue down $5 706 $5 740 $5 760 $5 668 $5 659 $5 628 $5 591 $5 577 $5 628 $5 594 . The increase in Sky’s subscriber numbers is occurring at the expense of $6 000 $4 905 $5 049 $4 991 $4 753 $5 021 $4 797 $4 828 ARPU. The regular price of NOW TV packages ranges from 8 to 34 GBP a $5 000 $4 484 $4 610 month (sport), well below the average price of Sky TV packages Sky’s. $4 274 $4 000 $4 663 ARPU dropped by 4 USD YoY, down to 54.31 USD a month in Q2 2019. $4 404 $4 577 $4 157 $4 262 $4 321 $3 842 $3 898 $3 942 $3 999 . Broadband revenue is helping to offset Comcast’s lost pay TV income. $3 000 Meanwhile ad revenue for its cable business, which had been on a upwards 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q trajectory, dropped during the first two quarters of 2019, compared to 2018. 2017 2018 2019 Source: IDATE DigiWorld après Comcast, Pay-TV Markets and Players, December 2019

RESEARCH . Global Observatory/Reports: - Techno-economic analysis - Global databases . Digital trends study programmes . Publications on future technologies CONSULTING Since 1977, our teams have been providing consultancy . Market analysis and user behaviour services, market intelligence solutions and networking . Business models opportunities to help deepen understanding of what makes . Public policy the digital economy tick, and to assist our clients in their . Feasibility studies strategic decision-making. . Digital transformation strategies . Strategies and operations support We are proud to work with over 400 of the industry’s most . Training and communication prominent companies as well as public policymakers which, year after year, confirm their faith in what we do, and in our THINK TANK three areas of activity: . 30 Clubs in Paris, London, Brussels and Morocco . 3 Conferences – Montpellier, Paris and Morocco . 3 Deep Dive Workshops . DigiWorld Yearbook (International)