Global Cable: Market trends & business models 7...3% of the French population use myTF1 but didn’t watch the group’s broadcast channels in the month prior to responding to the

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Understanding the Future of Entertainment

Global Cable: Market trends & business models

Guy Bisson, Ampere Analysis

January 2018

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Chile

Latvia

Lithuania

Switzerland

Norway

IsraelHungary

Canada

Brazil

Netherlands

China

SwedenPortugal

Romania Singapore

Belgium

Cyprus

Luxembourg

Japan

Denmark

Nigeria

Bulgaria

USA

Croatia

Ireland

Australia

Hong_Kong

South_Korea

Russia

SpainTurkey

Malta

Slovak_Republic

Germany

Mexico

Poland

UK

Colombia

Thailand

Peru

Finland

Estonia

India

Slovenia

France

Austria

Argentina

Czech_Republic

0

10

20

30

40

50

60

70

80

90

0 20 40 60 80 100 120 140

Cab

le T

V p

enet

rati

on

Multi-play monthly ARPU ($)

Cable TV penetration vs Multi-play ARPU (2005)

2005: Cable TV drove market with multiple high penetration/low ARPU markets

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Chile

Latvia

Lithuania

Switzerland

Norway

Israel

Hungary

Canada

Brazil

Netherlands

China

Sweden

Portugal

Romania

Singapore

Belgium

Cyprus

Luxembourg

Japan

Denmark

Nigeria

Bulgaria

USA

CroatiaIreland

AustraliaHong_Kong

South_KoreaRussia

SpainTurkey

Malta

Slovak_Republic

Germany

MexicoPoland

UK

ColombiaThailand

Peru

Finland

EstoniaIndia

Slovenia

France

AustriaArgentina

Czech_Republic

0

10

20

30

40

50

60

70

80

90

0 20 40 60 80 100 120 140

Cab

le T

V p

enet

rati

on

Multi-play monthly ARPU ($)

Cable TV penetration vs Multi-play ARPU (2016)

Today, penetration has dropped, but ARPU has grown substantially

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Chile

Latvia

Kenya

Lithuania

Norway

IsraelHungary

Canada

Brazil

NetherlandsChina

Sweden

Portugal

Romania

Singapore

Belgium

Cyprus

Luxembourg

Japan

Bulgaria

Denmark

Nigeria

Mexico

USA

Croatia

Ireland

Australia

Hong_KongSouth_Korea

Russia

Spain

Turkey

Angola

Slovak_Republic

Germany

Poland

UK

Colombia

Switzerland

Peru

Finland

Estonia

India

Slovenia

Thailand

France

Austria

Czech_Republic

Argentina

Malta

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cab

le s

har

e o

f p

ay T

V

Largest cable operator share of cable

Cable consolidation and cable pay TV positioning

Poland post MM Polska combination

High Consolidation & strong cable pay TV

position

Low consolidation & weak cable pay TV

position

Low consolidation & strong cable pay TV

position

High consolidation & weak cable pay TV

position

Consolidation monitor: Largest cable co share of cable TV RGUs by country

Great place to be!

Great place for

consolidation

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Broadband: key ARPU contributor = to 50% of blended average income in CEE

0

5

10

15

20

25

30

35

40

45

Global WesternEurope

CEE Asia Pacific MENA

Mo

nth

ly A

RP

U (

$)

ARPU contribution by service (2016)

Pay TV Fixed-line Broadband Fixed Telephony

41.82% 44.59%34.46% 33.24%

45.65%

29.07%35.63%

50.40%

14.26%

30.75%

29.12%19.78% 15.14%

52.50%

23.60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Global WesternEurope

CEE Asia Pacific MENA

AR

PU

co

ntr

ibu

tio

n (

%)

ARPU contribution by service (2016)

Pay TV Fixed-line Broadband Fixed Telephony

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UAE

Saudi_ArabiaAlgeria

Luxembourg

Portugal

Australia

Malaysia

Tunisia

Malta

New_Zealand

Israel

USA

Greece

BrazilMorocco

Egypt

Chile

Argentina

Lithuania

UKFranceAustria

Russia

Slovak_Republic

Japan

Ireland

Sweden

Finland

Thailand

Spain

Switzerland

Poland

Croatia

Denmark

Romania

South_Africa

Lebanon

Turkey

Mexico

Canada

GermanyEstonia

Colombia

Italy

Belgium

NorwayNetherlands

SloveniaBulgaria

Czech_Republic

Hungary

Latvia

Peru

ChinaIndia

Kenya

Cyprus

Syria

Jordan

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

- 20.0 40.0 60.0 80.0 100.0 120.0

Broadband speed (Mbps) vs Penetration (#/100 HH)

Broadband speed and penetration are largely in step around the world

Analysis based on Ampere Analysis and Akamai State of the Internet

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44

%

37

%

34

%

30

%

30

%

29

%

26

%

26

%

26

%

24

%

24

%

23

%

22

%

22

%

SaudiArabia

Turkey Brazil Italy USA Poland Denmark UK Germany Sweden Australia Spain France Netherlands

Broadband subs – chose broadband service because of speed (%)

But speed becomes less important to consumers once it reaches a certain rate

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

Improving broadband infrastructure

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Mobile data usage is

growing rapidly in fixed

infrastructure-poor markets

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2010 2011 2012 2013 2014 2015 2016 2017

Global mobile data traffic - aggregate, PB/month

APAC CEMA LAM NAM WE

Source: Ericsson Mobility

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.

2.2

2

6.8

0

2.0

8

2.3

3

3.4

9

LAM NAM APAC CEMA WE

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

17x increase in 5 years

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13%15% 16%

20% 20%23%

24% 25% 25% 26%

30%

39%

47%

63%

25%

34%

45% 44%

31%

41%

46% 44%

37%

42%

49%

64%

55% 56%

Germany France Poland UK Netherlands Australia Spain Italy Sweden Denmark USA Brazil Turkey SaudiArabia

Internet users watching online video daily on smartphone or PC/TV (% of respondents, Q3 2017)

Smartphone PC or TV

And this infrastructure variation reflected in online video viewing medium

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.

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Broadcasters are regaining ‘lost’ audience reach through OTT offerings…

Watched BBC channels +

iPlayer in last month – 56%

Watched BBC channels in last

month: 77%

Watched iPlayer only in last month – 7%

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 TF1

channels + myTF1 in

last month –24%

Watched TF1 channels in last

month: 73%

Watched myTF1 only in last month – 3%

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.

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…and are more effectively reaching older consumers than other OTT services

16%

17%

19%

21%

24%

31%

27%

28%

28%

34%

26%

24%

23%

23%

24%

18%

20%

19%

18%

13%

10%

11%

11%

9%

6%

TV Everywhere

Catch-up

SVoD

Social Video

Pirate

14 global markets: Share of monthly users, by age (%)

18-24 25-34 35-44 45-54 55-64

17%

18%

20%

22%

25%

28%

26%

28%

28%

33%

25%

24%

23%

23%

26%

19%

20%

18%

18%

12%

10%

12%

10%

9%

5%

TV Everywhere

Catch-up

SVoD

Social Video

Pirate

Europe: Share of monthly users, by age (%)

18-24 25-34 35-44 45-54 55-64

Catch-up and operator-led TV Everywhere services are more effectively reaching older consumers than social video and SVoD players

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Significant differences in

terms of broadcast viewing

by age bracket

12:00:00 AM

12:14:24 AM

12:28:48 AM

12:43:12 AM

12:57:36 AM

1:12:00 AM

1:26:24 AM

1:40:48 AM

6am - 9am 9am - 12pm 12pm - 2pm 2pm-5pm 5pm-8pm 8pm-12am 12am-6am

France example: Time spent viewing broadcast TV, by age bracket (self-reported), h:m:s

18-24 25-34 35-44 45-54 55-64

• Unsurprisingly, older French

consumers are more avid viewers of

broadcast content, while younger

consumers watch the least broadcast

TV

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.

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On-demand more

effectively reaching

younger brackets,

extending prime-time

12:00:00 AM

12:07:12 AM

12:14:24 AM

12:21:36 AM

12:28:48 AM

12:36:00 AM

12:43:12 AM

6am - 9am 9am - 12pm 12pm - 2pm 2pm-5pm 5pm-8pm 8pm-12am 12am-6am

France example: Time spent viewing on-demand TV, by age bracket (self-reported), h:m:s

18-24 25-34 35-44 45-54 55-64

• 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.

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219 216 218 225 225242 242 241 232 220 216 212

3 5

9 11 1416

18 20 21

2 47 11 18

1 22 5

7 8 12 18 22 26 32

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

UK: Minutes per person per day of viewing, by platform (mins/person/day)

Broadcast Catch-up SVoD Other

This means that online viewing tends to be (partly) complementary

Source: BARB, Zenith, Ampere models and estimates. Note, YouTube and Facebook estimates are indicative only.

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484

531 549580

513

607

666693 694

672642 624

593560

538 523 510490

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

Sweden – commercial TV revenue (€m), relative to minutes of TV viewed (#/capita/day)

Ad revenue TV viewing

But changes in viewing patterns do eventually feed through to revenue

Source: MMS, Group M, Ampere models and estimates.

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Thank you

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www.ampereanalysis.com

@tvintelligence

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Documents

Global Cable: Market trends & business models 7...3% of the French population use myTF1 but didn’t watch the group’s broadcast channels in the month prior to responding to the