The past two years have seen remarkable growth in the adoption of multiplay services in Europe. To help drive the uptake of bundled services, operators have discounted their multiplay fees by up to 50% compared with baskets of stand-alone products. The economic crisis has played a major role in driving consumers to seek out competitive offers for their voice, broadband and pay-TV needs. As a result, multiplay subscriptions across Europe are expected to grow by 11% in 2009. As the multiplay market reaches saturation, however, the rate of subscription growth will decrease by more than half: we forecast a CAGR of only 4% for 2010-2014. The combination of dwindling subscriber growth rates and a secular decline in ARPS threatens to erode multiplay service revenue.
In 2008 multiplay revenues across the Czech Republic, France, Germany, Italy, the Netherlands, Romania, Russia, Spain and the UK totaled €31bn (US$46bn) and are expected to reach an estimated €37bn ($49bn) in 2009, representing euro-denominated growth of 18% in 2009. As subscription growth begins to subside, multiplay service revenue will slow to a modest CAGR of 7% between 2010 and 2014. With the growth in multiplay subscribers forecast to slow while market competition increases, operators must focus on increasing ARPS and securing subscribers to ensure continued revenue growth in the medium term.
Pyramid Research believes that the rapid growth in multiplay adoption over the past two years, fueled primarily by promotional campaigns and cut-throat pricing, is no longer sustainable. This Telecom Insider analyzes how operators can use value-added services, content exclusivity and long-term contracts to slow the decline in ARPS, while drawing on the experiences of UPC in the Czech Republic, Free (Iliad) in France, Comstar in Russia and Sky in the UK.
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