Telcos will account for more than a quarter of global pay-TV subscriptions by 2021, with market shares exceeding 50% in Latin America and Western Europe. After the recent wave of pay-TV acquisitions by telecoms operators, Ovum expects the bulk of telco TV subscriber growth to be driven by organic IPTV expansion over the coming years.
IPTV still dominates a mixed-delivery landscape
The global base of TV connections delivered by telcos or telco-controlled pay-TV operators is set to expand at a 4% CAGR to reach 310.9 million by 2021, by which time telcos will account for 28% of total subscriptions. IPTV will remain the dominant telco TV delivery platform, supporting 65% of connections by the end of the forecast period, compared with 23% and 13% for satellite and cable, respectively. By far the largest telco TV market is China, where IPTV connections will almost double to reach 86 million – 24% of the country’s pay-TV subscriptions – by 2021, with the US and Brazil far behind at 33 million and 22 million connections, respectively.
The strongest geographical subregions in terms of telco TV market share are Latin America (57% in 2021), Western Europe (53%), and North America (35%). Among these, however, only Western Europe’s expansion is led primarily by IPTV growth (although, even here, almost a quarter of connections will by via cable infrastructure). The Americas are dominated by AT&T’s acquisition of the DTH operator DirecTV, while Latin America also has a substantial telco-controlled cable TV base representing around 40% of the regional total.
M&A has played a substantial role in boosting the existing telco TV footprint. The "traditional" cable and satellite customers that make up more than a third of the total telco TV base typically reflect either joint ventures or, more commonly, acquisitions of established pay-TV operations by telcos, such as AT&T (DirecTV), Vodafone (Kabel Deutschland, ONO, and Ziggo), and Telefonica (Digital Plus and GVT). However, Ovum expects the recent wave of major telco TV acquisition to slow down in the coming years. Moreover, acquired operations over traditional infrastructure tend to be mature and, therefore, are not expected to grow dramatically in the coming years. As a result, organic IPTV expansion represents the lion’s share of anticipated telco TV growth going forward.
In the medium term, traditional multiplay bundling of dual, triple, and quad-play services will remain the key driver of telco TV net additions – particularly for IPTV and cable operations. However, mobile-first and multiscreen OTT variants will increasingly find their way into the portfolios of DTH operators, as well as those telcos with a mobile play. These will appear in the form of value-added service bolt-ons, as well as bundled components aimed at upselling customers to higher value TV (and broadband) package tiers.
Telco TV Forecast: 2016–21, ME0003-000744 (October 2016)
Jonathan Doran, Principal Analyst, TV