Television in Europe. ITMedia Annual Report 2013

TURNING DIGITAL A wrap-up TV experience

XI Annual Report

10 September 2013

Turning Digital – A wrap-up TV experience, 10 September 2013

Foreword

Turning Digital, now at the 11° edition, is a global analysis on television in 17 countries in Western Europe. It provides data and insights of the Big 5 markets (France, Germany, Italy, Spain and United Kingdom).

The first part reports the state of the art of TV in Europe at the end of 2012, and its current perspectives. More in details: resources (licence fee, advertising, pay TV), audience shares, multichannel, digitization.

The second part focuses on the trends in progress. This year focus is on content ubiquity and on broadcasters’ strategies in the new market of convergence, with several case studies.

More than 100 pages and 70 among tables and charts.

Data sources: proprietary data, public data, rating agencies, research institutions and field interviews.

1

ITMedia Consulting


2

The Market

Trends


3

Source: © 2013 ITMedia Consulting

The TV market in Western Europe 2001-2012

+44% since 2001

+3,4% CAGR

6667,7

69,9

74,1

79,7

84,6

88,9 89,786,9

91,794,3 95,1

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

€bi

llion

TV market revenues in WE, 2001-2012


4

Pay TV slows down but still the market driver


Pay TV represents 45% of market revenues (including licence fee), vs a 33% market share of advertisding

35%

40%

45%

50%

55%

60%

65%

2004 2005 2006 2007 2008 2009 2010 2011 2012

Advertising revenues vs. Pay TV revenues

Advertising Pay TV


5

Advertising

As a whole, advertising revenues decreased by 3.7%, but some countries reported even sharper decline (Italy and Spain), while some others experienced a modest growth.


-4,5%

1,7%

-12%

-17,1%

0,4%

-20%

-15%

-10%

-5%

0%

5%

France Germany Italy Spain UK

TV advertising growth 2012/2011


Audience fragmentation In the digital age, TV remains must-see. The average viewer watches live TV longer than ever before, but it seems rarer and rarer that many of them are watching the same thing at the same time. The proliferation of channels has led to heavy fragmentation of audiences across niche markets

6

230

222

254

246

239

35

43

40

33

62

0 50 100 150 200 250 300 350

France

Germany

Italy

Spain

UK

Average video consumption in the Big5, 2012 (minutes per viewer per day)

TV consumption Online video consumption

301

279

294

265

265

Viewers are increasingly able to stream video content on their TV sets with little or no commercial interruption, via video-game consoles (Xbox, Wii), streaming media devices (Roku, Boxee, Apple TV), or increasingly, internet connectivity built directly into TV-sets. Advertisers need to accept that linear TV is no longer the sole platform viewers use when they lean back on the couch to watch. Viewers now have more choice than ever in the types of channels they can watch, making the advertiser’s job of efficiently reaching them harder than ever

Source: data processed by ITMedia Consulting


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Multichannel revenues

Multichannel (Pay and adv of thematic channels) exceeds half of the TV market


Multichannel TV market revenues

56%Rest of TV

market revenues44%

TV market revenues in 2012

€53.3 bln

€41.8 bln


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Digital TV in Western Europe


89,9108,5

131,3 143,0 155 165,4

54%

65%

77%83%

89% 91%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

20

40

60

80

100

120

140

160

180

2007 2008 2009 2010 2011 2012

DTV

pen

etra

tion

%

mill

ion

hous

ehol

dsDTV in Western Europe 2012


After the switch-off

49%54%

59%65%

72%78%

80%80%

83%83%84%85%

99%99%

100%100%100%

0% 20% 40% 60% 80% 100%

GreecePortugal

SwitzerlandDenmarkSweden

GermanyNetherlands

NorwayBelgium

AustriaIreland

LuxembourgFrance

SpainUK

FinlandItaly

Digitalization ranking in Western Europe 2012

Western Europe: 91%


9


10

Digital TV and the leadership of DTT


Analogue9%

Cable22%

Satellite32%

IPTV11%

DTT36%

Digital91%

Breakdown of WE TV households by platform 2012

0

50

100

150

200

2004 2005 2006 2007 2008 2009 2010 2011 2012

mill

ion

hous

ehol

ds

Digital TV evolution in WE 2004-2012

Analogue Digital Cable Digital Satellite IPTV DTT


DTT offering grows

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Source: OBS data processed by ITMedia Consulting


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IPTV in Western Europe

IPTV's strength in France is well-known (40% of European subscribers). But it is doing well in several other locations too, like Germany, Austria, the Netherlands, Portugal and in Scandinavia.


8,2

11,813,5

15,2

17,5

0

2

4

6

8

10

12

14

16

18

20

2008 2009 2010 2011 2012

mill

ion

hous

ehol

ds

IPTV subscribers 2012+15%


Beyond HD

HDTV penetration has taken off as equipment prices have fallen to affordable levels and the number of channels on offer has become attractive to a mass audience.

Some operators now offer HD channels free to subscribers within other packages – though subs often still have to pay for a relatively more expensive HD set-top box

French CSA licensed 6 new HD channels on DTT, while the BBC announced that it will launch five new free HD channels by early 2014

The next stage will be the Ultra HD, which includes the 4K and the 8K standards. These allow a resolution which is 4 and 8 times higher than the “standard” HD.

Netflix announced U-HD plans, Sky carried out trials and EBU supports the technology

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Source: company data processed by ITMedia Consulting

• Active 3D • £35 000 • Panel:

Samsung Display

• Glasses-free 3D

• £4 000 • Panel AUO

• Passive 3D • £22 000 • Panel: LG Display

• Passive 3D • £25 000 • Panel: LG

Display

4K TV sets currently available in the UK

ITMedia Consulting


14

The market

Trends


The race to the TV market

Adoption of OTT is being driven, and accelerated, by increasing broadband penetration coupled with the plethora of Internet Protocol enabled devices available to consumers today: laptops, smartphones, tablets…

OTT is no longer a niche offering in the hands of early adopters. Viewing figures and content volumes are growing. Aggregators invest in content and in new aggressive business models

Deep convergence between television and Internet has finally arrived and media companies can no longer ignore it. Traditional business models are being questioned by potentially superior business models that are based on a deeper and more direct relationship with the end consumer

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Source: elaborazioni ITMedia Consulting

2005 2012

1. Start-Up• Technological innovation• User-generated content• Limited number of aggregators

2. Monetized Consumer Offerings• Non-premium professional

content• Bolder experimentation with

rights• Traditional broadcasters

launch products/services

3. Professionalization & Expansion• Premium content rights

acquisition• Original content creation• Investing in multiplatform• Market-specific offerings

across geographies

The evolution of Internet TV services


But broadcasters fight back

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Offering Partnership

Canal Plus France

CanalPlay Infinity (new monthly SVOD package) Canal+ Multi-Ecran—access to all 5 HD channels via TV, Xbox, PC/Mac, tablet, or smartphone with a single membership

Distribution deals with Xbox and other platforms across connected devices

France Télécom/Orange “Film Pulse” online tool that collates opinion and sentiment on films from across the Web and social networks

Orange and Microsoft partner to offer Orange TV on the Xbox 360, and launch a voice and motion-activated TV control to Orange TV customers

Mediaset Premium Play on-demand service provides access to about 2,000 titles via TV, PC and Xbox

on-demand programs to Xbox LIVE Gold service customers of the XboX360 console. Launched on iPad on April 2012

TF1 TF1 launches iPad and iPhone app, with free access to live content & catch-up programs

Partnership with Twitter, launching a Twitter-follow button for all content available via video-sharing platform and website

RTÉ Ireland

Worldwide launch of iOS app allowing iPad, iPhone Player and and iPod touch users to stream RTÉ programming for up to 21 days after transmission, as well as watch selected live shows from RTÉ One, RTÉ Two and RTÉ NewsNow

Player and NewsNow offerings branching back towards TV. Currently accessible through PS3, plans are in place to launch on other key gaming and connected TV platforms, Pay TV—and to extend onto the free to air Irish DTT platform Saorview


Digital entertainment in a multiscreen world

Content is king, however, the context is getting more and more important: this brings into focus the importance of other assets and capabilities, above all, expertise across screens and devices

Today TV is moving away from appointment-based viewing and revolving more around watching content on the best available device possible

As more mobile screens penetrate the market, and more content becomes available online, the way people watch TV continues to evolve into a mobile, multi-screen experience

live video has an immediacy and urgency that leads to longer viewing times across all devices

Multiscreen represents the first step in fending off the competitive threat from OTT players : by making pay-TV less TV-centric—i.e., allowing access on tablets, laptops and smartphones, and enabling TV to be moved around the house and on the road—multiscreen becomes an attractive alternative to OTT

17

41,22

8,1213,1

45,8

2,26 2,23 2,454,76

0

10

20

30

40

50

Desktop Mobile Tablet Connected TV/Game Consoles

min

utes

Live TV vs On Demand video, time per play per device

Live TV VOD



Time to take the challenge

The movie industry has already embraced internet as a distribution platform, and a similar phenomenon awaits the broadcast TV industry.

Catch up TV is a success story but there is also evidence of appetite for live content, as shown by the number of users watching live streamings

Broadcasting TV online is a great chance to enhance the relation with the consumers and it can leverage on the power of big data => real-time data with real-time implications for improving the consumer experience

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68%

34%38%

43%

62%67%

0%

10%

20%

30%

40%

50%

60%

70%

80%

France Germany Italy Spain UK Western Europe

% of internet users watching TV online in the Big 5, 2012


ITMedia Consulting

Via Collina, 24 00187 Roma

phone: +39 06 42027112 fax: +39 06 42904853 mail: [email protected] website: www.itmedia-consulting.com

Turning Digital – A wrap-up TV experience. 10 September 2013 19

Television in Europe. ITMedia Annual Report 2013

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