The number of cable subscribers has dropped around Europe, according to a new study released on Monday, but revenue for operators there is actually up. The report also points to integration deals with Netflix by operators as a positive trend for service providers for maintaining subscribers in the European Union.
IHS Markit says that the cable industry in the EU has continued to grow despite competition from traditional and over-the-top (OTT) companies. In the “2016 European Broadband Cable Yearbook,” which the research firm produces in association with trade group Cable Europe, gross cable revenues were said to have totaled €22.4 billion in 2015, up from €21.2 billion in 2014. IHS says Germany and the United Kingdom were the largest markets in terms of revenue, generating €4.7 billion and €4 billion, respectively.
TV’s €10.5bn in revenue for 2015 accounted for almost half of total cable operators’ revenue, according to the report, and the contribution of internet and telephony services in the EU has risen over recent years, from 47 percent in 2010 to 53 percent in 2015.
“In response to challenges posed by other platforms, 2015 saw a determined effort by many operators to invest in infrastructure and significantly improve their offerings,” Maria Rua Aguete, research director at IHS Technology, says. “Perhaps the most ambitious was Project Lightning, a huge broadband expansion program undertaken by Virgin Media in the United Kingdom.”
The report also stresses that faster speed efforts from European operators will be more than welcomed by subscribers given the planned rollouts of more Ultra HD services and the ever-increasing uptake of more subscription video-on-demand (SVOD) services.
Additionally, the study points to European operators’ moves toward integrating Netflix into their platforms as a plus for potential growth. Netflix has of course made similar moves to integrate more seamlessly with cable operators in the United States, including with Comcast, which you can read more about here.
“Liberty Global’s pan operational deal with Netflix in 2016 shows a level of collaboration between cable and SVOD,” Rua Aguete says. “Our research concluded that the integration of Netflix into pay TV is having a positive impact on cable operators’ key performance indicators, generally benefitting their business while co-existing well with more traditional parts of the bundle.”
On the broadband side of things, internet revenue in the EU reportedly continued to grow, totaling €7.2 billion, which is said to be 9.7 percent higher than a year earlier. The United Kingdom led with €1.5 billion, followed by Germany (€1.1 billion) and Spain (€0.8billion), according to the report.
IHS Markit notes that the total number of EU cable TV subscribers continued to fall with the count at end of 2015 being 55.1 million, which was down from 55.7 million a year earlier. However, the take-up of digital services was on the rise and by the end of 2015, with close to two-thirds of cable homes reportedly opting for digital TV.
2015 saw a surge of mergers and acquisitions in the EU, and the report foresees more. In Germany, the third-largest cable operator Tele Columbus entered into an agreement to buy Primacom, and in France, Altice gained complete control of Numericable-SFR. Spain also saw several important deals.
“Further consolidation in the sector can be expected, with cable remaining fragmented compared to the platforms it competes with,” Rua Aguete observes.