TV subscriptions and licence fees

Key insights at a glance


Pay-TV growth rate slows as key markets become saturated. Global TV subscription revenue is forecast to reach US$243.80bn in 2019, rising at a 3.5% CAGR. But this masks the fact that increases are slowing in markets like the US, Canada and France, even if potential remains in countries outside Western Europe and North America.


The pay-TV business model is evolving in response to the growth of OTT players. As many new content outlets become available, TV subscription revenue is seeing reduced growth rates in each year of the forecast period. The forecast average annual growth will drop to 3.4% in 2015 to 2019, compared with 5.3% between 2010 and 2014, with six territories experiencing negative CAGRs in the next five years. The TV subscription industry needs to react to changing conditions in terms of its pricing structure and the way its most attractive content is bundled.


“Cord-cutting” may be slowed in the near term by the deployment of “TV Everywhere” services, but some erosion is inevitable. By 2019, North America and Western Europe combined will have added more than 300mn tablets and more than 250mn smartphones. This, allied to wider long-term evolution (LTE) deployment, will make video distribution cheaper for operators, meaning they are more likely to support over-the-top (OTT) delivery and provide larger data allowances for customers.


Five markets will see double-digit growth in subscription TV households. Five territories will enjoy double-digit growth in terms of subscription TV households to 2019: Greece, Saudi Arabia, Kenya, Indonesia and Thailand. While Greece and Saudi Arabia are developed markets beginning from relatively low bases, it is the latter three countries that best demonstrate the continued prestige attached to subscription TV in developing markets. Kenya, Indonesia and Thailand will see subscription TV household CAGRs of 13.7%, 12.1% and 12.2%, respectively, from 2014 to 2019.


TV and video consumption patterns are changing. The public is demanding high-quality original programming, available in a flexible, on-demand manner across numerous devices to satisfy the growing phenomenon of “binge viewing”, and OTT services offer the best outlet for this type of consumption. The move towards such services helps to explain why North American subscription TV penetration is expected to fall from 79.8% in 2012 to 78.1% in 2016.


The notion of the public licence fee is under unprecedented pressure. Public TV licence fee revenue is forecast to grow at just a 0.7% CAGR to 2019, well below the 3.5% CAGR growth of TV subscription revenue. Several factors, including government austerity measures and the growth of OTT video, are challenging the very premise of mandatory fees for traditional broadcasting.

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