Western Europe Pay DTT Market to Decline despite Free-To-Air DTT Market Remaining Significant

The Italian commercial broadcaster Mediaset ceased its pay Digital Terrestrial Television (DTT) TV service Premium and switched to providing streaming service starting in June 2019. Mediaset’s Premium service subscribers can cancel their subscription at no cost or choose to subscribe to Mediaset’s streaming service Infinity. Mediaset offers their Infinity service for free for the first 10 days; after that, the Infinity service will cost EUR7.99 (US$9) per month. The Infinity streaming service was first launched in 2013 with the aim of capturing the audience who prefers to access TV service via the Internet. Users can access the Infinity service via compatible devices, including iOS and Android devices, smart TVs, game consoles, and streaming boxes. A minimum of 1.2 Mbps broadband connection is required to stream the Infinity service.

Italy is the largest pay DTT market in Western Europe and accounts for more than 50% of total DTT subscribers in the region. Mediaset is the major pay DTT service provider in Italy, with more than 1.5 million paying subscribers in mid-2018. It lost the rights to broadcast Serie A and Union of European Football Associations (UEFA) Champions League soccer matches in 2018; failure to secure the soccer rights resulted in a loss of 300,000 customers in the second half of 2018. After Mediaset’s pay DTT shut down, Sky Italia’s DTT service, which was launched in 2018, will be the only DTT service available in Italy. Users who want to get Mediaset’s Premium channels have a choice to get Sky pay DTT service thanks to an agreement with Mediaset in 2018. Sky TV offers pay DTT service, including Mediaset Premium movies and drama channels, with Sky’s DTT service priced at EUR19.99 (US$22) for a package with 13 channels, including Mediaset-run channels, and a DDT service priced at EUR10 for a package which includes Sky Sports 2 and Sky Sports 1.

Germany is another market with significant pay DTT market size since the launch of Freenet DTT service in 2017. Other key DTT markets in Western Europe include France, the Netherlands, Sweden, and the United Kingdom. Although pay DTT is still provided by Sky Italia, the content choice on the platform is clearly quite limited. Mediaset’s termination of its pay DTT service is expected to result in a significant subscriber decline in pay DTT service across the region since customers can still choose to switch to Mediaset’s streaming platform or choose services on Direct-to-Home (DTH) or other streaming platforms.

The multiple choices of streaming and pay TV services available has been causing declining DTT reception in Western Europe. Before Mediaset’s termination of Premium, Dutch-language public broadcaster VRT switched off its DTT broadcast service in Belgium in December 2018. Less than 50,000 households are using VRT’s DTT service, and the company is now planning to invest more in its online platform VRT Nu. VRT Nu, which has more than 1 million registered users as of mid-2018, offers free live channels as well as additional services such as catch up and selected on-demand programing. VRT’s DTT switch-off leaves DTT users in Belgium with only one pay DTT platform, Antenne TV, which costs EUR9.95 (US$12) for 15 channels. Following VRT’s DTT switch-off, Swiss public broadcaster SRG terminated its DTT distribution via Digital Video Broadcasting—Terrestrial (DVB-T) in early June 2019. DTT reception is not a primary choice in Swiss households; 1.9% of total households uses the DTT platform.

DTT reception is reported to be declining in other markets in Western Europe as well. France’s media regulator Conseil supérieur de l’audiovisuel (CSA) reported that the number of households receiving Internet Protocol Television (IPTV) has exceeded DTT access in 2018. Spanish regulator Comisión Nacional de los Mercados y la Competencia (CNMC) has also reported progressive decline in DTT audience compared with other platforms such as satellite, cable, or IPTV. And Dutch pay TV operator KPN has been losing pay DTT service Digitenne subscribers while its IPTV user base has grown over the past few years. Pay DTT platforms usually offer a relatively limited number of channels compared to other pay TV platforms. Broadband household penetration and improving broadband connectivity is allowing a wider choice of subscription video services in addition to traditional pay TV services. This trend is likely to force DTT service providers with smaller subscriber bases to switch off or migrate to other subscription video platforms.

Despite the declining DTT audience, the platform still holds considerable market shares among different TV platforms. For example, nearly 76% of households in Spain, 57% of households in France, and 40% of households in the United Kingdom still receive DTT signals. Heavy reliance on DTT indicates that many TV households with a pay TV service or streaming service are still receiving DTT content.

As a result, content makers and broadcasters need to make investments to improve DTT broadcasting content quality from HD to Ultra High Definition (UHD) quality, with High Dynamic Range (HDR) of growing importance, to satisfy the households which already have higher-quality UHD TV sets. Partnerships with equipment manufactures and solution providers to improve compression technologies are required for efficient distribution of services. Ability to maintain the audience share to create revenue-generating opportunity for DTT platforms by integrating pay-per-view services will help boost the addressable market. Despite the high competition from subscription TV, DTT reception is not likely to end soon in Western Europe. Broadcasters should invest and innovate on their services to take advantage of a mature and substantial DTT market.