Bright outlook for pay-TV industry

21 January, 2014 by Don Groves

The Australian pay-TV sector is projected to post $5.3 billion in revenues and $565.5 million in profits in 2013-2014.

That’s according to research firm IBISWorld, which surveyed 10 businesses operating in that field.

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The industry has grown at an annual rate of 8.3% since 2009 due to subscribers paying higher fees, the introduction of digital services, rising advertising revenue, signing new subscribers and a fall in the churn (disconnect) rate, the firm said.

Despite increasing competition from online channels, IBISWorld forecasts pay-TV industry revenue will grow at an annualised 3% to $6.1 billion in 2018-19.

The report acknowledges the industry has struggled to boost the household penetration rate, which it estimates at 35% in Sydney, 28% in Melbourne and Brisbane, 21% in Adelaide, 18% in Perth and 14% in Tasmania.

“Pay-TV operators will continue offering discounted service connection prices and reductions on digital set-top boxes and services in an attempt to maintain existing subscribers,” it says.

The report notes there are high barriers to entry due to the market dominance of Foxtel and Telstra, which have deals with most of the major film studios, channels and networks, and the ability of the larger players to bundle pay-TV products with other telecommunication services.

“Overall, barriers to entry are expected to increase over the five years through 2018-19 as larger players further consolidate the market share,” it says.

Under that scenario, the entry of SVOD operators Netflix and Hulu may be unlikely.

 

 

 

 

 

 

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