Satellite Overtakes Terrestrial Television in Europe

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PARIS — Satellite television — considered a largely stagnant, mature market by satellite operators looking for growth in the developing world — overtook terrestrial television in Europe in 2011 for the first time as satellite dishes proliferated and the terrestrial-TV audience declined, according to a market survey sponsored by satellite fleet operator SES of Luxembourg.

The annual Satellite Monitor, which surveyed television markets in 35 nations in Europe and North Africa, also disclosed a modest decline in cable-television subscribers during a four-year period ending in December 2011.

The survey found a huge increase in IPTV, or television reception through DSL Internet links, for which 2011 appeared to be the breakout year. IPTV homes totaled nearly 16 million in Europe and North Africa as of December 2011, a more than fourfold increase since late 2007.

For European satellite fleet operators like SES, Eutelsat of Paris and Hispasat of Spain, the fact that more people are watching satellite television than terrestrial television is especially satisfying because 97 percent of satellite television homes as of December 2011 were equipped with digital television.

The move to digital television in and of itself is bad news for satellite operators as analog broadcasts use much more satellite bandwidth per program than do digital broadcasts. But digital television in Europe has been accompanied by a massive adoption of high-definition (HD) television, which requires several times the bandwidth per program of standard digital.

The price for full-HD televisions in Europe has dropped 60 percent in the past four years, to an average 598 euros ($800) at the end of 2011.

While 3-D TV has not followed in HDTV’s footsteps in terms of market adoption, it is nonetheless growing. Some 5.7 million 3-D TV sets were in service in Europe and North Africa at the end of 2011, compared with less than 1 million a year earlier.

The bottom line for satellite bandwidth providers like SES is that while Europe’s television growth rate does not match that of Latin America, the Middle East, Africa and parts of Asia, it is nonetheless a healthy market with life left in it.

“We spend a lot of time talking about the emerging markets, but the fact is that there are DTH [direct-to-home] markets in Europe that are continuing to grow as well,” SES Chief Executive Romain Bausch told reporters March 12 during the Satellite 2012 conference in Washington. Bausch had already reviewed the early results of the annual survey, which was published March 27.

“We have seen in Germany that cable is declining and satellite is gaining market share,” Bausch said, referring to SES’s biggest national market in Europe. “So not only have we succeeded in keeping the DTH households we had, but we have increased the number of households. Other markets like the U.K. and France are following the same path.”

Terrestrial TV homes numbered 79.4 million in the 35-nation survey area as of December 2011, down 18.4 percent since late 2007, the survey found. During the same four-year period, satellite television increased by nearly 22 percent, to 83.6 million homes.

Cable television homes during the same four-year period dropped by 3.3 percent, to 69.2 million as of late 2011.

SES’s principal European competitor, Eutelsat, is also moving southward and eastward — and more recently, into Latin America as well — in search of growth. But the company forecasts that demand for satellite transponders will grow by 2 percent per year, on average, between 2011 and 2016 in Western Europe alone. Eutelsat says demand in Central Europe — a region included in the SES-sponsored survey — will increase by 6 percent per year through 2016.

The SES survey includes nations not usually grouped inside Europe, including the North African nations of Algeria, Morocco and Tunisia. All three of these nations reported that more than 90 percent of their televisions homes were receiving digital broadcasts, compared with an average of 75 percent for the entire 35-nation survey area.

SES is bracing for the government-ordered shutoff of all analog television broadcasts April 30. SES initially will take a revenue hit with the loss of these analog customers but assumes that the loss will be made up in the coming years as Germany and the rest of Europe move to HDTV.