German Adoption of High-definition Television Is Good News for SES
PARIS — German satellite-television broadcasters and viewers appear to be adopting high-definition TV at a faster rate than predicted by satellite fleet operator, raising the possibility that SES will not suffer as large a revenue shortfall starting about two years from now as feared, according to a survey of the European market.
Luxembourg-based SES has told investors that it will increase its revenue by about 5 percent a year, on average, through 2012 on the strength of an unprecedented investment in new satellites and orbital slots. The company expects to spend some 875 million euros ($1.2 billion) in 2010 on new spacecraft, equivalent to 50 percent of its revenue, as the fleet-expansion spending reaches its peak.
The overall revenue growth will occur even as one of the company’s most important markets, Germany, transitions from analog to digital television broadcasts in April 2012.
Analog broadcasts use much more satellite transponder capacity than digital signals. SES has said that of the 38 transponders at its 19.2 degrees east orbital slot now devoted to analog TV in Germany, only one-half will be needed once the digital switch occurs. The remaining 19 transponders will have to be sold, starting in April 2012, to other, less-profitable markets, including France and Spain.
The net revenue shortfall, SES officials have said, will be about 40 million euros.
But that forecast made assumptions about the rollout of high-definition television in Germany that in retrospect may have been too conservative. High-definition (HD) broadcasts use more bandwidth than standard digital transmissions.
Markus Payer, a spokesman for SES’s SES Astra television broadcasting division, said March 30 that the company is not changing its revenue forecast for now despite the good news from the German market. As of February, Germany, which a year earlier had reported fewer high-definition television channels than Albania, had tripled its HDTV lineup, to 17 channels. Payer said SES expects that number to climb to “easily more than 20” by the end of 2010, bringing Germany to the level of France and Poland, but still way behind Britain, which counted 39 HDTV channels as of February, according to SES Astra’s Satellite Monitor.
The survey, conducted in 29 nations in Europe and North Africa, is based on interviews with nearly 70,000 television customers. SES said the surveying methods and results are verified by independent institutes and “accepted by regulatory bodies as objective market measurements.”
Wolfgang Elsasser, managing director of SES Astra Deutschland, said in a March 17 presentation in Berlin that the survey included 6,000 German households.
As is true in many other nations, German consumers are now buying flat-screen televisions whose images are much clearer in digital and, ultimately, HD format. Many German consumers are not waiting for the analog switch-off and are transferring to digital. Elsasser said some 4 million satellite-television subscribers — 25 percent of the total in Germany — have yet to make the switch.
“Our job is to get these 4 million households converted” by 2012, Elsasser said. “We are not scared about the analog switch-off. There are opportunities for us.”
One benefit to SES in the comparatively late German analog-to-digital switch is that it has given time for HD channels to develop, permitting much of the market to jump directly from analog to HDTV.
In parallel with the transition to HD programming, SES Astra has introduced a service called HD Plus in Germany to permit viewers to view encrypted channels alongside free-to-air channels. SES had made a previous attempt at a similar service several years ago, without much success.
But HD Plus, an SES Astra subsidiary, had already taken orders for 700,000 HD Plus cards as of mid-March, SES Astra Chief Executive Ferdinand Kayser said at the Berlin briefing. “HD Plus is already doing better than we had predicted,” Kayser said of the orders from manufacturers of digital TV receivers. He said these cards are expected to be distributed to distributors and sold “within the next few months.”
In Germany, HD Plus is offered free of charge for the first 12 months, with an annual subscription fee of 50 euros thereafter.
Kayser said the trend among broadcasters everywhere is to increase encryption to prevent piracy and to protect copyrights.
The test for HD Plus will come starting in 2011 when subscribers decide whether to begin the 50-euro payment or drop the service.
Across its entire fleet of satellites that cover Europe, North Africa and western Asia, SES Astra broadcasts 114 HD channels, a figure that Kayser said would surpass 120 by the end of this year.