Blog — 23 Apr, 2021
Subscription OTT revenues reach a third of multichannel's in Western Europe
Highlights
The 16 countries in our analysis had a combined 121.9 million paid subscriptions at the end of 2020, with the United Kingdom, Germany and France occupying the top three positions.
Over the last five years, the total pay TV base in the region grew at a CAGR of 0.2% to reach 108.6 million at the end of 2020, with IPTV driving most of the growth at a 4.8% CAGR over the same period.
OTT is providing key content owners such as The Walt Disney Co., Discovery, Paramount and HBO, among others, with paid content growth opportunities that had waned on traditional pay TV, although at a cost — consumers can easily churn at any time.
Western Europe hosts some of the most highly penetrated markets for subscription over-the-top services. The 16 countries in our analysis had a combined 121.9 million paid subscriptions at the end of 2020, with the United Kingdom, Germany and France occupying the top three positions. Over the last five years, the total pay TV base in the region grew at a CAGR of 0.2% to reach 108.6 million at the end of 2020, with IPTV driving most of the growth at a 4.8% CAGR over the same period.
The 16 key markets examined in this article are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the U.K.
Operators no longer consider subscription OTT services as adversarial competitors, therefore seeing distribution partnerships with certain providers as beneficial to both parties. For example, an operator that concentrates on triple-play bundles, in which three services are offered at a discounted price, might have a relatively basic channels package when compared to Netflix Inc. or Amazon Prime Video. An OTT partnership is likely to boost the video offer and act as a marketing strategy to attract subscribers to purchase more generic services, such as fixed broadband and fixed telephony. The most recent example of a big partnership deal was Vodafone's January 2021 announcement that it will offer Discovery Inc.'s subscription OTT service, discovery+, to over 100 million of its fixed and mobile subscribers in 12 European markets. Moreover, we are seeing operators, such as TalkTalk Telecom Group PLC in the U.K., drop their pay TV offers, relying instead on a mix of OTT services and free-to-air TV.
In recent years, global OTT players such as Netflix and Amazon have overtaken pay TV groups in the number of subscriptions in the region. Local broadcasters and multichannel providers have also managed to increase their subscription OTT market shares, riding the wave of consumers' shift from linear to on-demand viewing, which has resulted in households subscribing to more services on average compared to previous years. As a result, Austria, Denmark, Ireland, Italy, Norway, Spain, Sweden and the U.K. had more OTT than pay TV subscriptions at the end of 2020. These are all either fast-growing or mature markets when it comes to streaming-video uptake. We expect this trend to continue, with OTT subscriptions trailing behind multichannel in only Belgium, Greece and Portugal in 2025.
