Wednesday, May 20, 2009

Mierda, ventiladores, televisión de pago, y la implosión económica

(Okay, I know I haven't been keeping to my word on posting frequency...)

It's interesting to listen to the differing takes coming out of companies in Q1 on just how defensive pay TV might be in the economic downturn. It seemed to me that UPC, for example, showed much stronger performance in its pay TV numbers than in broadband, and for my money Virgin Media also performed better than I had expected.

Then again, maybe it's a matter of degrees. What might things look like if the economy got really bad, as is the case in Spain? GDP run-rate decline of nearly 8% (quarterly decline, annualized), unemployment heading for 20%, that sort of degree of badness.

Well, a picture is emerging from Spain which is not particularly encouraging for pay TV bulls. I concede there are likely to be all sorts of drivers at work here, such as household creation, repossession rates, etc., which could cloud the numbers, and we may see something different in next quarter's results. However, on the basis of the numbers reported by key players in the Spanish market, pay TV no esta caliente.

Telefonica's numbers showed that ULL and wholesale DSL in Spain grew by 119k, which is 5.6% sequential growth. Telefonica's own retail base grew by 46k, and Orange was flat. ONO, which reported today, added 12k broadband customers in the quarter, which is seqential growth of a little under 1%. However, in pay TV, Telefonica's Imagenio lost 7,700 customers, ONO lost 23k, Orange claims to have grown IPTV subs by 12k (but as it looks like 6Mbps and national calls is priced the same as the above plus IPTV after the special offer period, does this really count?), and Prisa's Digital + satellite offering lost 24k and suffered a 30% decline in pay-per-view ARPU.

So in summary, on the basis of these numbers it looks as though broadband overall grew by 177k, and pay TV contracted by over 43k, at least among the companies cited here. I'm cautious about trying to draw too many conclusions from one quarter, nor am I sure that anyone should really care, except that, in snapshot form, it appears to confirm my own suspicions about consumer behavior when forced by events to confront what they really can and can't live without.


Ignition said...

James, in the case of Virgin Media the main source of profit is the HSI these days I believe.

Prior to that would have been dialup and telephony, though since the unmetered phone packages became more and more common that has been less and less worthwhile.

Of course the only people who know this for sure are Virgin, however I'm pretty sure that, apart from the PPV, the TV doesn't make much cash at all due to the high costs of programming.

UPC appear to rely less on that, they seem to charge less for TV and more for the HSI, at least in Netherlands.

Anonymous said...

Hi James,

The CMT hasn't still published the data for the whole sector for the 1Q 09. But you can see some trends in the 2008 reports. In the last quarter of 2008, IPTV revenues grew by 37% and there were 708.000 subscribers (+25%). On the other hand, pay per view fell by 12%.

You have the complete report here:

CMT Blog