UK pay TV revenues reaching their peak

MUMBAI: UK pay TV revenues are fast reaching maturity, forcing operators to find other revenue streams to ensure growth.

UK pay TV revenues are forecast to reach $9.3 billion in 2011, up by $3.3 billion on 2006. However, revenues are only expected to climb by another $250 million to reach $9.6 billion in 2016, according to a new report from Digital TV Research.
The UK Digital TV Forecasts report states that TV ARPU will fall as operators convert subs to bundles and as competition from free multichannel services intensifies.

Report author Simon Murray said, "Digital TV penetration has almost reached saturation point as it exceeds 95%. Free-to-air services are responsible for much of the recent digital TV growth. Digital pay TV penetration is not expected to climb much and will remain below 58% of TV households."

However, the number of homes taking DTT on their primary set has plateaued at about 10 million homes. In fact, the number of primary free-to-air DTT homes is forecast to decline from 2013 as homes are tempted away by other platforms. FTA DTT will, thus, lose its mantle as the most popular TV platform to pay DTH in 2014.

Sky has taken pay DTH penetration beyond 36 per cent of TV households. However, its growth will be muted in the next five years, with one million additional UK subs [the platform is also available in Ireland] forecast.

The 10 million UK DTH subs mark will be breached in 2012. As
Sky increases ARPU by offering more services, DTH revenues are forecast to reach $7.80 billion in 2016, up from $7.27 billion in 2010.

Cable TV revenues peaked in 2010 at $1.69 billion. Cable
subscription and VOD revenues are forecast to be $1.54 billion in 2016, down 8.7 per cent on 2010.

Murray added, "Although subscriber numbers will continue their slow growth [4 million subs by 2016], TV ARPU for cable subs will fall as more homes convert to bundles (therefore spending less on TV services but more overall with Virgin)."

IPTV is unlikely to ever make too much headway in the UK. Fewer than one million homes are forecast to pay for IPTV services by 2016. As a consequence, IPTV revenues will remain low, reaching $226 million in 2016.

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