Information Analytics Expertise SEPTEMBER 2014 THE FUTURE OF TELEVISION IN EUROPE An assessment of the changing nature of television in Europe, and what is shaping the transformation Ben Keen: IHS Technology / ALL RIGHTS RESERVED
The European film and television space is still broadcast-led 2
The European film and television industry remains a broadcast-led sector 2013 Film and TV revenues (Europe - bn) 3.0 5.8 8.1 Online YouTube, Netflix, itunes, ViaPlay etc. Physical DVD/BD disc purchase/rental Theatrical Cinema box-office 92.4 Broadcast including subscription pay TV, public service broadcast and commercial ad-funded broadcast. e.g. Sky, BBC, RTL, SVT, Canal Plus Revenues include: consumer-level revenues (spend less VAT) for paid-for media, net advertising revenues and public (e.g. licence/tax funding) for public service broadcasting.
PRESENTATION NAME / MONTH 2014 And we expect broadcast to continue to grow 120 European Broadcast TV revenues ( bn) 100 80 60 40 20 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 4
But the funding mix of the TV economy is shifting 5
The revenue mix of broadcast income is increasingly skewed towards subscription PRESENTATION NAME / MONTH 2014 50 45 40 35 30 25 20 15 10 5 0 Broadcast revenue by business model ( bn) 2005 2009 2014 2018 Subscription Public funding Advertising 6
PRESENTATION NAME / MONTH 2014 And consolidation in the pay TV sector means operators are gaining ever-greater power Sky UK 2014 TV Subs: 10.7m (f) W. Eur. mkt share: 9.4% 7
PRESENTATION NAME / MONTH 2014 And consolidation in the pay TV sector means operators are gaining ever-greater power Sky Europe 2014 TV Subs:19.4m (f) W. Eur. mkt share: 16.5% 8
Advertising Revenue ( m) PRESENTATION NAME / MONTH 2014 Many commercial broadcasters are also still feeling the after-effects of 2009 s recession 3.0 2.5 2.0 1.5 Mediaset (It) ITV ProSiebenSat.1 TF1 RTL TV Advertising Revenue from Major Broadcasters 1.0 0.5 Mediaset Espana 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 9
Europe is also increasingly connected 10
EBU KNOWLEDGE SUMMIT / OCT 2014 Two thirds of Western European households and four in ten Central and Eastern European households already have broadband 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Broadband penetration of households (%) 64.6 38.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Central and Eastern Europe Western Europe 11
IT EL HR FR PL IE SK IS CZ ES RO BG AT SE FI SI EE DE NO HU CY UK DK PT LV LU LT NL BE CH MT EBU KNOWLEDGE SUMMIT / OCT 2014 Markets are making strong progress to ensure universal broadband availability 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Broadband availability (% of homes) - 2013 Fixed broadband Source: IHS & VVA on behalf of the European Commission Broadband Coverage in Europe 2013
IT EL HR FR PL IE SK IS CZ ES RO BG AT SE FI SI EE DE NO HU CY UK DK PT LV LU LT NL BE CH MT And nearly two-thirds of homes are already covered by next-generation broadband services EBU KNOWLEDGE SUMMIT / OCT 2014 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Broadband availability (% of homes) - 2013 Next-generation access Fixed broadband Source: IHS & VVA on behalf of the European Commission Broadband Coverage in Europe 2013
PRESENTATION NAME / MONTH 2014 By 2020 the whole EU should be covered by 30Mbps broadband 14
PRESENTATION NAME / MONTH 2014 As a consequence of this growth, online video usage is increasing 15
EBU KNOWLEDGE SUMMIT / OCT 2014 The online video market in Europe is expected to double in size over the next few years 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 European online video revenues ( bn) 7.1 3.8 0.8 0.1 2006 2010 2014 2018 16
But as with the traditional broadcast world, the funding mix of online video is changing Europe: Online video revenue by business model ( m) PRESENTATION NAME / MONTH 2014 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Transactional Ad-supported Subscription 17
UK and Scandinavia are the largest Netflix markets and expected to remain key territories 20 18 16 14 12 10 8 6 4 2 0 WE: Netflix subscribers (m) 2014 2018 Benelux France GSA Nordics UK&Ireland
Two thirds of European spending on SVoD is expected to be with Netflix by 2018 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Europe: Netflix share of overall SVoD revenue ( bn) 2011 2012 2013 2014 2015 2016 2017 2018 Revenue Of which Netflix 70% 60% 50% 40% 30% 20% 10% 0%
PRESENTATION NAME / MONTH 2014 Services like Netflix are already having an impact on adjacent sectors 20
HOME ENTERTAINMENT IN EUROPE / SEPTEMBER 2014 Territories in which Netflix has launched have seen greater-than-average declines in traditional physical video spend 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% -40% -45% Note: Film & TV only YoY change in spend on physical video (2013, %) 21
In markets like the US and UK, which have seen strong online video uptake, broadcast viewing is beginning to decline 310 Linear Broadcast TV viewing (mins/person/day) 290 270 250 230 210 US UK 190 170 150 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: IHS, National panel bodies
But TV is not the only industry in turmoil
EBU KNOWLEDGE SUMMIT / OCT 2014 Radio audiences are in decline across many markets in Europe CAGR weekly per person radio listening (2008-2013) 1.0% 1.1% 0.6% -0.2% Sweden Netherlands UK France Italy Germany Spain -0.6% -1.9% -3.7% Source: National radio audience measurement bodies, IHS calculations 24
Those countries seeing the worst declines also have the highest spend on subscription music services 1.25 EBU KNOWLEDGE SUMMIT / OCT 2014 Monthly spend on subscription music services per household (2013, ) 0.17 0.31 0.06 0.00 0.05 0.04 Sweden Netherlands UK France Italy Germany Spain 25
EBU KNOWLEDGE SUMMIT / OCT 2014 And those with the lowest spend 1.25 Monthly spend on subscription music services per household (2013, ) Lowest subscription music spend, growth in radio 0.17 0.31 0.06 0.00 0.05 0.04 Sweden Netherlands UK France Italy Germany Spain 26
Europe is rapidly becoming a fragmented market for audiences though
EBU KNOWLEDGE SUMMIT / OCT 2014 The average European household will have nearly 6 video-capable connected devices by 2018 1 Smart TV for every 2 households Nearly 3 smartphones per household 1 STB per 4 households 1 games console per 10 households 1 tablet for every 2 households 1 DMA per 10 households Over 1 PC per household 28
Online video viewing is increasingly fragmented across these devices ITV RTL M6 Pay TV; 35% Connect ed TV; 2% PC, 46% Mobile/ tablet; 22% Mobile/ tablet; 16% PC; 84% Pay TV; 40% Connect ed TV; 1% Mobile/ tablet; 19% PC; 41% 2013 online viewing by device
And PSBs are already showing how far this fragmentation might go 40 35 30 25 20 15 10 5 0 36 28 BBC iplayer TV request across different devices (%) 17 19 21 28 PC Mobile devices Tablets Games Consoles 6 4 16 15 TV platform operators 4 Internet TV/connected devices 3 3 0 Other devices Jul-13 Jul-14 Source: BBC 30
Questions? 31