Pay TV holding its own in Europe

September 23, 2021

Collaboration with OTT service providers and studios
Jonathan Bennett, Chief Commercial Officer

Jonathan Bennett

Chief Commercial Officer

Europe is becoming a region of cord knotters rather than cord-cutters as subscribers embrace pay-TV rather than reject it. And the driving force is the partnerships providers are forging with over the top (OTT) video streaming companies.

Research suggests that pay-TV is more than holding its own in the region. S&P Global Market Intelligence, for example, analysed 16 key markets in Western Europe – Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK – in March 2021. It found they had a combined total of 122m paid subscriptions at the end of 2020, with the total pay-TV base in the region has expanded 0.2% to reach 109m at the end of the same year.

This is in stark contrast to the US, where pay-TV subscribers have declined significantly over the past five years. Forecasts from Digital TV Research estimate that global pay-TV revenues will fall by US$30bn over the next five years – from US$173bn in 2020 to US$143bn by 2026 – after peaking at US$201bn in 2016. The US will account for the majority of that US$30bn pay-TV revenue decline, dropping almost US$23bn from US$80.3bn in 2020 to US$57.4bn in 2026.

The number of pay-TV subscribers expanded by 15m during the same period, reflecting the significant difference between cable TV fees compared with the average OTT streaming subscription fees. The contrast is starker in the US than it is elsewhere, with reports suggesting that pay-TV services cost anywhere up to US$100 a month while Netflix comes at about US$17.[i]

If you can’t beat them, join them

As my colleague, Greg Sigel, had pointed out in his recent blog US pay-TV providers fight back with new SVOD launches. Pay-TV incumbents in the US have been doing their best to grab back the initiative from OTT service providers like Netflix, Disney+ and Amazon Prime Video. ViacomCBS introduced Paramount+ in March, with Premium Plans available for US$10 a month (and ad-supported versions for US$5 a month). Comcast-owned NBC Universal launched a premium SVOD service – Peacock – in the summer of 2020, costing US$10 a month with a free tier also offering thousands of hours of ad-supported content.

Jonathan Kriegel, our CEO, had also predicted how the US$43bn merger of WarnerMedia and cable channel Discovery earlier this year would create even more competition in the global SVOD market (see WarnerMedia and Discovery combine to form a streaming giant).

Those companies are now expanding their proposition beyond North and South America into other regions, with the wealthier demographic of Western Europe first on their list of destinations. WarnerMedia will gradually roll out HBO Max on the continent in the next few years, for example[ii]. Peacock will come to UK, Ireland, Germany, Italy, Austria, and Switzerland later this year through a partnership with Sky that bundles premium services with NOW and Sky Ticket membership passes.[iii]

Exclusive content rights hold the key

S&P Global Market Intelligence noted that operators offering pay TV and satellite TV services in Europe no longer seem to consider subscription OTT services as competitors but as a source of content that is equally advantageous to their own businesses.

Most harnesses bundled and discounted OTT offers to help them attract and retain new subscribers to other services, often fixed and mobile broadband and telephony services. For example, Vodafone announced it would offer Discovery+ to over 100m fixed and mobile subscribers in 12 European countries this year. Others, including TalkTalk in the UK, are phasing out their pay-TV offers in favour of bundling OTT services alongside free to air TV. Sky includes OTT bundles with access to its premium pay-TV sports and entertainment services across its European footprint.

S&P Global Market Intelligence estimates that the number of OTT subscriptions exceeded those of pay-TV equivalents in Denmark, Ireland, Italy, Norway, Spain, Sweden, and the UK had more at the end of 2020. The company expects that trend to continue, though OTT subscriptions are trailing behind multichannel in only Belgium, Greece and Portugal in 2025.

The problem with OTT video is that consumers can switch loyalties at any time, and they do so frequently, often with the release of new movies and TV Shows exclusive to a particular streaming service. As long as Hollywood studios continue to license their programming to local pay-TV players rather than release straight to OTT, many European consumers are likely to stick with them for the moment.

[i] As Americans cut the cord, Europeans sign up for more pay-TV, The Economist, 11th September 2021

[ii] HBO Max to Launch in the Nordics and Spain, Followed by Central, Eastern Europe and Portugal,, 31st August 2021

[iii] Peacock gets first international expansion to Sky in Europe, DigitalTV Europe, 30th July 2021

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