As the US analog switch-off date mandated for February 2009, and most Western European countries terminating transmission before the 2012 deadline, the next two years will see a rapid increase in new digital TV (DTV) households. Indeed, DTV is expected to grow by an average of 12% year-on-year, with particularly strong adoption in the near term as broadcasters terminate analog terrestrial television. In 2007 there were 158 million households using DTV services in Western Europe and the US; by 2012, Datamonitor expects there to be an estimated 274 million digital TV households in these regions.
For most national markets, the significant increase in DTV services will occur around 12 to 24 months prior to analog signal termination. Indeed, driven by campaigns from national regulatory authorities and public service broadcasters, there will be a massive push to migrate consumers to digital platforms to free up valuable spectrum capacity.
Meanwhile, digital terrestrial television (DTT) households in Europe and the US will increase from 26 million in 2007 to 55 million by 2012, illustrating an average yearly growth rate of 16%. As a whole, however, Datamonitor expects there to be a significant migration away from free-to-air services in the medium to long term, as bundled offerings (triple play, quad play etc.), enhanced features and premium content become more important to consumers.
While all DTV platforms will show strong growth over the next three years as consumers transition to digital services, the two fastest growing platforms in Europe and the US will be digital cable and DTT. Datamonitor expects them to achieve net household increases of 50 million and 30 million, respectively. Concerning other platforms, IPTV services will show the strongest average yearly growth at around 28%, reaching almost 23 million households by 2012. Despite satellite services illustrating very moderate growth of 5.5%, there will be a 20 million increase in subscribers by 2012, reaching around 86 million households.
The television sector is evolving, and consumers face an ever-increasing array of entertainment channels and options from which to obtain video content. This is putting increasing pressure on traditional service operators to reduce churn. Pay-TV platforms – such as cable, satellite, and IPTV – are facing new challenges to ensure that their services remain compelling and attractive. For many service operators, this challenge is growing increasingly pertinent as non-traditional competitors enter into the marketplace.
A primary strategy for customer retention will be the provision of new services, including interactive features and the bundling of alternative communications services such as data and voice. Furthermore, as customers grow accustomed to accessing online content whenever they wish, video on-demand services will become a ‘must-have’ for operators. As a whole, Datamonitor expects DTV services to illustrate strong growth as customers demand, and are willing to pay for, new services, and analog switch-off drives digital migration.
