As COVID-19 started to spread in 1Q20, quarantine measures were implemented to limit the spread of the virus. Western European pay-TV operators responded by offering additional or free accesses to different TV contents including sports channels and subscription video on demand (SVoD) services, etc. to its customers while in quarantine.
During the period, major SVoD operators such as Netflix benefitted from the widespread quarantine measures as we continued to see significant subscriber growth in the region. InfoCom estimated that Netflix tallied almost 46m paying subscribers in 1Q20 – translating to 24% growth YoY. Traditional pay-TV operators likewise experienced sustained growth, mainly driven by refreshed TV offers featuring expanded TV channels and even access to SVoD services such as Netflix and Amazon Prime. As per InfoCom’s Quarterly pay-TV monitoring service, some incumbents such as Deutsche Telekom, Orange, and Swisscom managed to sustain growth (see chart) despite the increasing TV household penetration and competition from alternative operators.
Considering the impact of COVID-19, InfoCom expects traditional pay-TV services (especially IPTV) in Western Europe to grow but possibly at a slower rate in the next periods mainly due to the negative impact of saturation and competition from alternative providers (i.e. OTT SVoD). Operators could mitigate this impact or else sustain revenue growth by expanding their TV portfolio in terms of content, mode of access, and/or subscription model. In terms of content, operators can explore to increasingly integrate SVoD services in their TV packages (i.e. aside from major services such as Netflix and Amazon Prime, recently-launched Disney+ could be considered eventually). Operators may consider SVoD integration across all TV tiers wherein access to such contents may require additional subscriptions (e.g. additional SVoD subscription for lower-tiered TV offers, while it could be already integrated to monthly subscription cost of higher-end TV packages). In terms of mode of access, operators could increasingly explore expanding to different platforms (i.e. via mobile application, TV dongles/stick, or set-top boxes) and broadband networks (i.e. own network or network agnostic) to cater to a wider customer profile. Finally, a shorter service subscription option (e.g. month-to-month) could be considered especially for app-based TV offers to entice budget-conscious customers, although we believe this requires higher customer retention efforts to maximise revenue opportunities and limit churn for this model.
We have already seen a mix of these strategies on operators such as Deutsche Telekom through its refreshed “MagentaTV" offers which recently included a network-agnostic TV stick among its subscription options. The said offers helped the operator achieve a higher growth rate (for instance, in its IPTV service) relative to other incumbents we have monitored so far.-CLICK HERE TO FIND OUT MORE INFORMATION ABOUT THIS REPORT
The Western European fixed broadband market sustained its positive trend in 1Q20 amidst the community lockdowns that halted some fixed broadband network deployments in most countries. The market's performance was still on a par with its development in the previous quarters, generally recording a steady growth in regional household penetration to around 85% this period. As expected, the demand for high-speed broadband services continued to push the overall fixed broadband subscriptions up by around 2% YoY, as the new social arrangements (i.e. work-from-home, remote learning) pushed further the household consumption of data services in the region.
During the period, InfoCom observed a marginal ARPU* increase for some operators partly as a result of the increasing shift of customers to fibre-based offers with higher contracted bandwidths. For instance, Proximus registered a slight QoQ growth (<1%) in its fixed broadband ARPU, coupled by around 1% QoQ growth in average revenue per convergent customer in light of the increasing share of FTTP (+23%) and convergent (i.e. Minimus, Epic Combo) subscribers. This was also the case for Telia Sweden which recorded a marginal fixed broadband ARPU growth (+0.5% QoQ), as the increasing take-up of fibre-to-the-premise (FTTP) services managed to somehow curtail the faster churn in its xDSL base.
InfoCom expects the fixed broadband market to sustain its uptrend in the coming periods as broadband deployments (e.g. fibre and DOCSIS 3.0/3.1) resumes/ continues – particularly in Belgium, Ireland, Italy, and France. However, the pace of infrastructure deployments is expected to be somewhat slower as there are still some area restrictions (e.g. eir will continue its FTTH project but only in areas where it is relatively "safe" to do so). Faster deployment momentum is expected towards end-2020 if markets continued to further relax COVID-19 measures in the coming months.-Click here to find out more information about this report