Global Cable: Market trends & business models Guy Bisson, Ampere Analysis January 2018 1
Cable TV penetration 2005: Cable TV drove market with multiple high penetration/low ARPU markets 90 80 70 Netherlands Belgium Switzerland South_KoreaMalta Luxembourg Cable TV penetration vs Multi-play ARPU (2005) 60 Argentina Germany Canada Denmark USA Israel 50 Sweden Hungary Portugal Finland Romania Singapore 40 Austria Slovak_Republic China Estonia Hong_Kong Bulgaria Slovenia 30 Ireland Latvia Poland India Norway LithuaniaCzech_Republic 20 Australia Russia Thailand Chile Turkey Mexico UK 10 JapanFrance Croatia Spain Peru Colombia Brazil 0 Nigeria Cyprus 0 20 40 60 80 100 120 140 Multi-play monthly ARPU ($) 2
Cable TV penetration Today, penetration has dropped, but ARPU has grown substantially 90 80 70 60 50 40 30 20 10 0 Cable TV penetration vs Multi-play ARPU (2016) Belgium Netherlands Finland Romania Germany Malta China Canada Denmark Switzerland Argentina Hungary Sweden Singapore USA Russia Austria Luxembourg South_Korea Slovenia Israel Lithuania Estonia Portugal Hong_Kong India Poland Australia Bulgaria Mexico Norway Thailand Slovak_Republic Chile Czech_Republic Colombia Latvia Brazil Japan Cyprus Turkey Ireland UK Croatia Spain Nigeria France Peru 0 20 40 60 80 100 120 140 Multi-play monthly ARPU ($) 3
Cable share of pay TV Consolidation monitor: Largest cable co share of cable TV RGUs by country 100% 90% Great place for consolidation Low consolidation & strong cable pay TV position Cable consolidation and cable pay TV positioning 80% China Thailand Argentina Netherlands Finland Germany Australia 70% Singapore Colombia India Austria Belgium Denmark 60% Canada Romania Sweden Malta Lithuania Hungary USA Switzerland Czech_Republic Luxembourg 50% South_Korea Mexico Brazil Israel Hong_Kong Russia Estonia Slovenia 40% Poland Chile Bulgaria Norway Portugal Latvia 30% Japan Cyprus Spain Low consolidation & Ireland Poland post MM Slovak_Republic 20% UK Nigeria weak cable pay TV Polska combination High consolidation & Peru Turkey 10% position weak cable pay TV Croatia Kenya 0% Angola position France 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Largest cable operator share of cable High Consolidation & strong cable pay TV position Great place to be! 4
Monthly ARPU ($) ARPU contribution (%) Broadband: key ARPU contributor = to 50% of blended average income in CEE ARPU contribution by service (2016) ARPU contribution by service (2016) 45 40 35 30 25 20 15 10 5 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 19.78% 29.12% 35.63% 29.07% 41.82% 44.59% 15.14% 52.50% 50.40% 14.26% 34.46% 33.24% 23.60% 30.75% 45.65% 0 Global Western Europe CEE Asia Pacific MENA 0% Global Western Europe CEE Asia Pacific MENA Pay TV Fixed-line Broadband Fixed Telephony Pay TV Fixed-line Broadband Fixed Telephony 5
Broadband speed and penetration are largely in step around the world 16.0 14.0 12.0 10.0 8.0 6.0 4.0 Kenya India Morocco Peru Broadband speed (Mbps) vs Penetration (#/100 HH) Russia Thailand Chile Malaysia Colombia Argentina Bulgaria Romania Slovenia Germany Estonia Poland Slovak_Republic Lithuania UAE Austria New_Zealand Mexico Italy Croatia Ireland Turkey Cyprus Brazil Jordan China Finland Japan Denmark Spain Hungary Czech_Republic Latvia Canada Norway Netherlands Belgium Sweden Switzerland Portugal Malta USA Israel Luxembourg France UK Greece Australia 2.0 Syria South_Africa Tunisia Egypt Algeria Saudi_Arabia Lebanon - - 20.0 40.0 60.0 80.0 100.0 120.0 Analysis based on Ampere Analysis and Akamai State of the Internet 6
26% 26% 26% 24% 24% 23% 22% 22% 30% 30% 29% 34% 37% 44% But speed becomes less important to consumers once it reaches a certain rate Broadband subs chose broadband service because of speed (%) Speed is more likely to be a limiting factor for use of service in infrastructure-poor markets - it becomes a more important criterion for selecting a provider than in developed markets where small price differences are more relevant to consumers than the difference between (for instance) 35Mbps and 45Mbps Saudi Arabia Turkey Brazil Italy USA Poland Denmark UK Germany Sweden Australia Spain France Netherlands Improving broadband infrastructure 7
2.22 2.08 2.33 3.49 6.80 Mobile data usage is growing rapidly in fixed infrastructure-poor markets Traffic per smartphone GB/month Per device volumes remain highest in North America and Europe, but usage is closing fast in APAC, CEMA and LAM 14,000 12,000 10,000 8,000 6,000 4,000 Global mobile data traffic - aggregate, PB/month 17x increase in 5 years Mobile data volumes are climbing worldwide driven primarily by Asia, but with other regions responsible for significant volume. CEMA (Central and Eastern Europe, Middle East and Africa) is already responsible for nearly a fifth of global mobile data traffic. 2,000-2010 2011 2012 2013 2014 2015 2016 2017 LAM NAM APAC CEMA WE Source: Ericsson Mobility APAC CEMA LAM NAM WE 8
And this infrastructure variation reflected in online video viewing medium Internet users watching online video daily on smartphone or PC/TV (% of respondents, Q3 2017) Smartphone viewing becomes proportionally more important for Internet users in markets such as Turkey and Saudi Arabia, where fixed broadband is typically of lower quality/speed than in Western European markets. In Western markets such as the UK, France or Germany, consumers are much more likely to rely on PCs or Smart TVs for streaming content than they are smartphones. 13% 25% 34% 15% 16% 45% 44% 20% 20% 31% 23% 41% Smartphone PC or TV 46% 44% 42% 37% 24% 25% 25% 26% 30% 49% 39% 64% 47% 63% 55% 56% Germany France Poland UK Netherlands Australia Spain Italy Sweden Denmark USA Brazil Turkey Saudi Arabia 9
Broadcasters are regaining lost audience reach through OTT offerings Watched iplayer only in last month 7% Watched BBC channels + iplayer in last month 56% Of UK internet users, 77% (self-reported) watched BBC channels in the month preceding the Q3 2017 Ampere survey. 56% watched iplayer. 7% watched iplayer but not BBC channels, indicating that the catch-up service could be delivering a 9% audience reach boost over and above the broadcast channels alone. Watched BBC channels in last month: 77% Watched mytf1 only in last month 3% Watched TF1 channels + mytf1 in last month 24% Watched TF1 channels in last month: 73% In France, MyTF1 delivers a 4% audience reach boost 3% of the French population use mytf1 but didn t watch the group s broadcast channels in the month prior to responding to the Q3 survey. 10
and are more effectively reaching older consumers than other OTT services 14 global markets: Share of monthly users, by age (%) 18-24 25-34 35-44 45-54 55-64 Europe: Share of monthly users, by age (%) 18-24 25-34 35-44 45-54 55-64 Pirate 24% 34% 24% 13% 6% Pirate 25% 33% 26% 12% 5% Social Video 21% 28% 23% 18% 9% Social Video 22% 28% 23% 18% 9% SVoD 19% 28% 23% 19% 11% SVoD 20% 28% 23% 18% 10% Catch-up 17% 27% 24% 20% 11% Catch-up 18% 26% 24% 20% 12% TV Everywhere 16% 31% 26% 18% 10% TV Everywhere 17% 28% 25% 19% 10% Catch-up and operator-led TV Everywhere services are more effectively reaching older consumers than social video and SVoD players 11
Significant differences in terms of broadcast viewing by age bracket 1:40:48 AM 1:26:24 AM France example: Time spent viewing broadcast TV, by age bracket (selfreported), h:m:s Unsurprisingly, older French consumers are more avid viewers of broadcast content, while younger consumers watch the least broadcast TV 1:12:00 AM 12:57:36 AM 12:43:12 AM The youngest consumer group watches the least broadcast TV during prime-time, with older consumers particularly those in the 55-64 bracket, heaviest viewers of broadcast TV. 12:28:48 AM 12:14:24 AM 12:00:00 AM 6am - 9am 9am - 12pm 12pm - 2pm 2pm-5pm 5pm-8pm 8pm-12am 12am-6am 18-24 25-34 35-44 45-54 55-64 12
12:43:12 AM 12:36:00 AM France example: Time spent viewing on-demand TV, by age bracket (self-reported), h:m:s On-demand more effectively reaching younger brackets, extending prime-time 12:28:48 AM 12:21:36 AM 12:14:24 AM 12:07:12 AM On-demand service viewing has less of a prime-time peak than scheduled broadcast TV, and younger age brackets watch substantially more VoD. Prime-time is effectively extended, as VoD aids viewing flexibility peaks on mobile devices during lunchtime, particularly among younger viewers. 12:00:00 AM 6am - 9am 9am - 12pm 12pm - 2pm 2pm-5pm 5pm-8pm 8pm-12am 12am-6am 18-24 25-34 35-44 45-54 55-64 13
This means that online viewing tends to be (partly) complementary 300 UK: Minutes per person per day of viewing, by platform (mins/person/day) 250 200 1 2 32 5 7 8 12 2 18 9 11 14 4 22 26 32 16 7 11 18 18 20 21 150 100 219 216 218 225 225 242 242 241 232 220 216 212 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Broadcast Catch-up SVoD Other Source: BARB, Zenith, Ampere models and estimates. Note, YouTube and Facebook estimates are indicative only. 14
But changes in viewing patterns do eventually feed through to revenue Sweden commercial TV revenue ( m), relative to minutes of TV viewed (#/capita/day) Ad revenue TV viewing 484 531 549 580 513 607 666 693 694 672 642 624 593 560 538 523 510 490 153 154 157 159 163 164 160 161 155 148 148 141 134 128 123 120 117 115 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: MMS, Group M, Ampere models and estimates. 15
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