Cable is currently the leading pay-TV technology in Europe in terms of subscriptions, with a market share of 36.5% as of year-end 2018, closely followed by DTH/satellite (33.7%) and IPTV (28.3%).
GlobalData expects this to change drastically as IPTV will become the leading pay-TV technology by 2023 with a share of 33.7%. This is due to telcos expanding high-speed fibre-optic, cable and VDSL networks and increasing demand for multiplay bundles with IPTV access leading to the increase of IPTV share by 2023.
German operators are rapidly upgrading their networks, which will support IPTV growth. In April 2019, Vodafone Germany, for instance, completed its gigabit cable rollout in Berlin, following the upgrade of an additional 110,000 households in the capital to gigabit cable. By 2021, Vodafone Germany is planning to upgrade the entire network with 12.7 million homes passed.
Deutsche Telekom (DT) is carrying out a large investment programme to modernise its network and deploy fibre and VDSL. The telco is rolling out FTTH in selected locations and is expected to reach 6 million homes passed by 2021. In 2018, DT’s CAPEX reached US$10.4 million and is forecasted to increase to US$14.9 million with a high focus on LTE coverage, fibre network, and 5G rollouts.
Another market dynamic to highlight is the growing number of OTT (Over-the-Top) video players which are gaining market share. In order to stay competitive, pay-TV operators need to upgrade their service propositions by enhancing the value of the pay-TV packages, by not only adding additional content but also by providing better user experience (UX). Pay-TV players competing on UX usually create interactive video platforms with OTT features, provide on-demand videos, and increase their portfolio of HD and 4K content.
In order to enhance the UX, pay-TV operators have been investing in upgrading and expanding network infrastructure. Operators expand/upgrade fibre lines or upgrade cable to DOCSIS 3.0/3.1 to increase upstream and downstream rates and compete in the IPTV segment.