Digital conversion boosts Eastern European pay TV

Pay TV revenues in Eastern Europe will peak at $6.95 billion in 2019 - before slowly falling to $6.59 billion by 2024. Analog cable revenues will drop by $844 million over this period, so digital pay TV revenues will increase by $502 million to $6.56 billion.

Eastern Europe pay TV revenues by platform ($ m.) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2018 2019 2024 Analog cable TV 877 712 33 Digital cable TV 1,768 1,885 2,197 IPTV 1,182 1,265 1,420 Pay DTT 103 103 107 Satellite TV 3,003 2,988 2,833

Source: Digital TV Research Ltd Simon Murray, Principal Analyst at Digital TV Research, said: “Tough times continue in Eastern Europe, with poor job prospects forcing many to seek work abroad. This migration married with low birth rates mean that the number of TV households will fall in 18 countries between 2018 and 2024 – with the region’s TV households dropping by 2.5 million.”

Murray continued: “The number of pay TV subscribers in Eastern Europe will decline from 82.33 million at end-2018 to 78.64 million in 2024. Not great news but better than the US situation.”

Eastern Europe is slowly ridding itself of the legacy of analog cable TV. There were still 17.67 million analog cable subscribers by end-2018. This total will fall to 568,000 by 2024. The number of digital pay TV subscribers will increase by 13 million between 2018 and 2024 to 78 million – or up by 21%.

Russia will account for half of the region’s pay TV subscribers in 2024. However, Russia will lose 2.88 million pay TV subscribers between 2018 and 2024. The number of pay TV subs will fall in 10 countries between 2018 and 2024.

Eastern Europe Pay TV Forecasts

Table of Contents

Published in May 2019, this 224-page PDF, PowerPoint and excel report comes in three parts:

• Outlook: Forecasts for 22 countries in a 57-page PowerPoint document full of charts, graphs and bullet points; • Excel workbook covering each year from 2010 to 2024 for 22 countries by household penetration, by pay TV subscribers, by pay TV revenues and by major operator. As well as summary tables by country and by platform; • Insight: Detailed country-by-country analysis in an 87-page PDF document.

For more information, please click here or contact [email protected]

Forecasts for the following 22 countries and 80 operators:

Country No of ops Operators Albania 3 Digitalb; Tring; Albtelecom Belarus 3 MTIS, Zala, A1 Bosnia 3 , M:Tel; Total TV Bulgaria 3 , , A1 2 Max TV/T-HT, A1 Cyprus 3 Cytavision; Cablenet; Primetel Czech Rep 5 UPC, O2, Digi TV, Skylink; T-Mobile Estonia 3 ; Telia; TV Play Greece 2 , Cosmote 5 T-Home, Digi TV, UPC, Invitel, MinDig Latvia 3 Baltcom, ; TV Play Lithuania 3 TEO, Cgates, TV Play Macedonia 3 Vip/Boom; Max TV; Total TV 2 Sun; Moldtelecom Montenegro 2 Total TV; CT Poland 9 Multimedia Polska, UPC, Vectra, Inea, Toya, TP/Orange, Cyfra Polsat, NC+, Netia 4 RCS-RDS/Digi TV, UPC, , Orange TV Russia 8 Akado, ER Telecom, MTS, , /Veon, NTV Plus, Tricolor, Orion 2 SBB, 3 UPC, Skylink, Nova Digi/ Slovenia 5 Telemach, Neo TV, Total TV, T-2, A1 Ukraine 4 Volia; Triolan; Ukrtelecom; Viasat

SAMPLE: Hungary pay TV insight

• Pay TV penetration is already very high at 93% of homes. It will fall slightly over the next five years. The number of TV households is also falling. Pay TV subscribers will fall by 185,000 between 2018 and 2024. Pay TV revenues will peak in 2019 at $446 million, but will fall to $424 million by 2024.

• Just under half the TV households subscribe to cable and a quarter receive satellite TV services. Cable will lose subscribers to IPTV in coming years as competition (mainly to convert analog cable subs) intensifies. IPTV will reach 27% of homes in 2024, up from 22% in 2018.

Main assumptions behind the forecasts • We have lowered our household and TV household figures since the last edition. • The number of TV households will continue to fall. • The population is falling as people abroad to seek work. • Pay TV penetration is high and competition is fierce. • Pay satellite TV and pay DTT subscriber numbers are falling as homes convert to IPTV and digital cable. • T-Home is the largest pay TV operator, although UPC is not far behind. • sold its UPC assets • Digi acquired Invitel • The IMF has improved its GDP growth forecasts. Source: Digital TV Research

• Digital TV penetration reached 82% of TV households by end-2018, with 100% to be achieved by 2023. As analog terrestrial TV was switched off in 2013, all of the remaining analog homes are cable.

Hungary: Pay TV subs by platform (000) Dec-12 Dec-13 Dec-14 Dec-15 Dec 16 Dec 17 Dec 18 Total pay TV subs 3,288 3,402 3,409 3,479 3,533 3,546 3,552 Pay TV subs for top 10 2,908 3,032 3,095 3,206 3,276 3,338 3,375 players (95% share) Total cable/IPTV 2,310 2,395 2,381 2,451 2,560 2,618 2,685 Cable/IPTV subs for top 7 1,907 1,988 2,076 2,206 2,304 2,409 2,507 players (93% share) of which analog 1,071 984 931 906 843 759 698 of which digital 836 1,005 1,145 1,300 1,461 1,649 1,809 Sat TV subs (3 ops 100%) 915 921 901 896 871 831 776 Total satellite TV 915 921 920 914 889 848 776 DTT 82 123 113 104 101 97 92 Digital subs for top 9 1,836 2,049 2,163 2,299 2,433 2,579 2,677 Source: NMHH

• The National Media and Communications Authority’s (NMHH) Flash report estimated 3.55 million pay TV homes by end-2018, up slightly year-on-year. Analog cable, satellite TV and pay DTT all lost subscribers in 2018.

• At first glance, the Hungarian pay TV sector looks fragmented, with more than 400 cable operators, three main satellite TV platforms and three IPTV services.

Hungary: Split of pay TV subs by major operator (%) 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 Digi TV 23.2 22.5 23.3 24.3 25.1 25.5 30.3 Invitel 3.3 3.7 4.1 4.5 4.8 4.9 - T-Home 22.9 23.7 25.1 25.4 25.2 26.8 28.5 UPC 26.7 26.4 27.0 26.9 26.9 26.4 25.9 MinDig TV Extra 2.5 3.6 3.4 3.0 2.9 2.7 2.6 Other 21.4 20.1 17.1 15.9 15.1 13.7 12.7 Source: NRA; T-Home; NMHH

• However, UPC and (T-Home) offer TV services across multiple platforms. DigiTV is the third major operator but will challenge the other two if it merges with Invitel. These three operators control more than three- quarters of pay TV subscribers.

UPC Hungary operating data (000) 2012 2013 2014 2015 2016 2017 2018 Analog cable subs 307 257 210 170 131 92 68

Digital cable subs 327 377 431 479 532 591 624 Total cable subs 634 634 641 649 663 683 692 Satellite TV subs 243 265 280 289 292 266

Total video subs 877 899 921 938 955 949 Internet subs 487 518 554 588 632 675 694 Telephony subs 397 446 492 535 580 639 677

RGUs 1,760 1,863 1,967 2,061 2,167 2,263 2,063* Customer rels 1,030 1,051 1,076 1,095 1,113 1,111 863* Double-play % 25 16 13 12 11 11 14

Triple-play % 34 31 35 38 42 46 62 Source: Liberty Global * excludes satellite TV

• UPC had 692,000 cable subscribers by end-2018, up from 683,000 a year earlier. It is no longer breaking down its satellite TV subs base by country due to its pending sale to M7. We forecast 1.06 million subscribers by 2024.

• acquired the satellite TV assets from Liberty Global in November 2018. Vodafone bought the fixed assets earlier. Vodafone had 2.91 million mobile subs by end-2018.

• UPC’s digital cable TV subs pay HUF4,590-6,090/month ($17.06-22.64) for 95- 152 channels. Analog subs pay HUF2,790/month ($10.37) for 27 channels. By end-2018, 14% of its cable subs were double-play and 62% triple-play.

• Horizon Go is available – but not the full Horizon service – and SVOD platform Myprime (HUF750/month for 300 movies and 1,000 hours of series – prices halved in 2018).

• UPC Direct had 265,900 satellite TV subscribers by end-2017, with about 245,000 estimated by end-2018. The platform charges HUF2,890-3,990/month ($10.74-14.83) for 75-110 channels.

Digi TV operational data (000) 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18* Cable TV subs 385 404 411 437 473 500 689 Satellite TV subs 368 341 330 318 307 291 276 Total TV subs 753 745 741 755 780 791 965 Broadband subs 301 329 347 382 428 467 747

Cable TV ARPU € 7.70 7.32 7.11 7.23 7.45 8.20 8.30 Satellite TV ARPU € 8.10 7.97 7.60 7.75 8.22 9.20 9.10 Source: Digi Communications * includes Invitel

• Digi TV has been much more forthcoming with information since parent and Romania-based RCS-RDS issued bonds. Satellite TV ARPU is a little higher than cable. Digital cable subs pay HUF3,100/month ($11.52) for 110 channels and satellite TV ones HUF3,300/month ($12.68) for 89 channels.

• The residential and small business interests of Invitel (692,000 RGUs) were acquired by Digi in July 2017. The Competition Authority blocked the move in November 2018, but revoked the decision soon afterwards.

• For the joint operation, we forecast 899,000 subs by 2024, with analog cable losing 231,000 subs and digital cable gaining 214,000 and satellite falling by 50,000 subs.

Telekom Hungary TV operational data (000) 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 Cable subs 370 290 230 191 173 157 129 122 109 IPTV subs 124 226 313 390 445 498 550 629 715 Satellite TV subs 254 281 291 307 307 307 290 276 264 Total TV subs 749 797 835 888 925 962 969 1,026 1,088 Pay TV market share % 25.4 25.8 27.2 27.6 27.7 28.9 30.6 Blended TV ARPU 2,949 3,048 3,106 3,139 3,155 3,280 3,332 3,480 3,479 (HUF) Cable broadband subs 181 213 246 282 315 341 347 370 396 DSL/fiber subs 482 500 539 518 549 656 669 704 752 Source: T-Home

• Incumbent Magyar Telekom (T-Home) recorded 1.09 million TV subs by end- 2018, with IPTV up and cable and satellite down. IPTV became the largest TV platform for the operator in 2012, with only the IPTV services advertised on its site. We forecast 1.19 million TV subscribers by 2024, with IPTV providing most of the growth.

• The company provides quad-play bundles. It had 5.33 million mobile subscribers by end-2018. The company also offers electricity and gas services. Magyar Telekom is 59.21% owned by via CMobil.

• Regulator NMHH awarded 4G licenses to M-Tel, Vodafone (2.91 million mobile subs by end-2018), (3.13 million mobile subs by end-2017. Acqiured by PPF in 2018) and Digi in September 2014.

• Antenna Hungaria launched a FTA DTT platform (MinDig, 12 channels) in December 2008. The pay DTT service (MinDig TV Extra, 25-43 pay channels for HUF1,499-2,799/month, $5.57-10.41) started in May 2010.

• MinDig TV Extra had 92,000 subs at end-2018, with subscriber numbers falling. Antenna started standalone SVOD sports platform MinDig Go Sport in November 2017.

• There were 188,000 primary DTT homes by end-2018. The original planned analog switch-off date of December 2011 was postponed until October 2013. About 135,000 settop boxes were given to poorer homes. The fifth multiplex started operations in October 2014, following on from the fourth which launched in June. TDF sold Antenna Hungaria to state-owned utility company MVM in March 2014 as part of its divestment process.

• The International Monetary Fund forecasts average GDP growth over the next five years. GDP per capita was $16,016 in 2018. The population is slowly declining, with 9.77 million recorded by end-2018. The UN forecasts that had a population of 1.72 million in 2018.

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Total households (000) TV households (000) Digital cable subs (000) Analog cable subs (000) Pay IPTV subscribers (000) Pay Satellite TV subs (000) Free-to-air satellite TV HH (000) Analog terrestrial hholds (000) Primary FTA DTT hholds (000) Primary Pay DTT hholds (000) Digital homes (000) Analog homes (000) Pay TV subscribers (000) Total DTT homes (000)

Digital cable subs/TV HH Analog cable subs/TV HH Pay IPTV subs/TV HH Pay Satellite TV/TV HH Free-to-air satellite TV/TV HH Analog terrestrial/TVHH Primary FTA DTT/TV HH Primary pay DTT/TV HH TVHH/Total HH Digital/TV HH Analog/TV HH Pay TV Subs/TV HH Total DTT homes/TVHH

Stand-alone dig cab subs (000) Double-play digl cab subs (000) Triple-play dig cable subs (000) Stand-alone pay IPTV subs (000) Double-play pay IPTV subs (000) Triple-play pay IPTV subs (000)

Revenues ($ million) Stand-alone digital cable revs Double-play dig cable TV revs Triple-play digital cable TV revs Digital cable TV subs revenues Digital cable TV on-demand revs Digital cable TV revenues Analog cable TV subs revs Cable TV revenues

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Stand-alone IPTV revenues Double-play IPTV revenues Triple-play IPTV revenues IPTV subscription revenues IPTV on-demand revenues IPTV revenues

Satellite TV subscription revs Satellite TV on-demand revs Satellite TV revenues

DTT subscription revs DTT on-demand revenues DTT revenues

Subscription revenues On-demand revenues Total revenues

Average Revenue Per User (ARPU - $) Stand-alone digital cable subs Double-play dig cable TV subs Triple-play digital cable TV subs Average dig cable (subs & VOD) Analog cable TV subs Stand-alone IPTV subs Double-play IPTV subs Triple-play IPTV subs Average IPTV (subs and VOD) Pay Satellite TV (subs) Pay Satellite TV (subs and PPV) Pay DTT (subs) Pay DTT (subs and PPV) Average monthly ARPU

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Pay TV subscribers by operator (000) UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (total) MinDig (pay DTT) Others

Share of pay TV subs by operator % UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (total) MinDig (pay DTT) Others

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Subscription & VOD revenues (US$ million) UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (total) MinDig (pay DTT) Others

Share of pay TV revenues by operator % UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (total) MinDig (pay DTT) Others

Hungary pay TV outlook

Homes by platform (000) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2017 2018 2019 2020 2024 A terres 0 0 0 0 0 Pay DTT 97 92 89 85 77 Free DTT 284 196 183 236 314 Free satellite 78 78 78 77 77 Pay Satellite 846 785 738 705 647 IPTV 733 857 933 969 1,034 A Cable 816 699 583 426 0 D cable 1,053 1,190 1,282 1,375 1,681

Revenues by platform ($m) 500 450 400 350 300 250 200 150 100 50 0 2017 2018 2019 2020 2024 Pay DTT 9 8 8 8 7 Pay Satellite 123 116 109 103 93 IPTV 81 91 101 106 110 A Cable 70 59 50 39 0 D cable 150 166 179 188 213

Hungary pay TV outlook

Pay TV subs by operator (000) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2017 2018 2019 2020 2024 Others 515 541 516 436 213 MinDig 97 92 89 85 77 Invitel 174 0 0 0 0 Digi TV 791 965 975 946 899 T-Home 1,021 1,088 1,102 1,127 1,185 UPC 949 937 943 965 1,064

Pay TV revenues by operator ($m) 500 450 400 350 300 250 200 150 100 50 0 2017 2018 2019 2020 2024 Others 61 64 67 64 46 MinDig 9 8 8 8 7 Invitel 20 10 0 0 0 Digi TV 91 101 111 110 101 T-Home 109 115 119 120 120 UPC 143 142 141 142 150

Digital TV Research publication schedule 2019 Eastern Europe Pay TV Forecasts May £1000/€1200/$1300 North America OTT TV & Video Forecasts April £500/€600/$650 North America Pay TV Forecasts April £500/€600/$650 Latin America OTT TV & Video Forecasts April £1000/€1200/$1300 Latin America Pay TV Forecasts April £1000/€1200/$1300 Asia Pacific OTT TV & Video Forecasts March £1000/€1200/$1300 Asia Pacific Pay TV Forecasts March £1000/€1200/$1300 Middle East & North Africa OTT TV & Video February £1000/€1200/$1300 Forecasts Middle East & North Africa Pay TV Forecasts January £1000/€1200/$1300 Sub-Saharan Africa Pay TV Forecasts January £1000/€1200/$1300 Sub-Saharan Africa OTT TV & Video Forecasts January £1000/€1200/$1300

2018 Eastern Europe OTT TV & Video Forecasts September £1000/€1200/$1300 Western Europe OTT TV & Video Forecasts September £1000/€1200/$1300 Global OTT TV & Video Forecasts September £1800/€2160/$2340 Global SVOD Forecasts September £1500/€1800/$1950 Global Pay TV Subscriber Forecasts April £1500/€1800/$1950 Global Pay TV Revenue Forecasts April £1500/€1800/$1950 Global Pay TV Operator Forecasts April £1500/€1800/$1950 Western Europe Pay TV Forecasts March £1200/€1440/$1560

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