www.idate.org
TV broadcasting : is it time for a consolidation opening the way to pan-European players ?
Laurence Meyer
Head of the Media Economics department
IDATE
www.idate.org22
Total world TV market revenues
0
50 000
100 000
150 000
200 000
250 000
1995 1996 1997 1998 1999 2000
in M
Eu
ros
Europe USA Japan RoW
150,2 G€
234,3 G€
The World TV market:sustained growth over the last decade …
AAGR : 9,2%
Source : IDATE
www.idate.org33
The World TV market:but major differences in the way TV is financed
Europe : Subscription TV has
driven the market
USA :TV adv. spending has been the main growth
factor
Source : IDATE
Trend in the European TV market financing
0
5 000
10 000
15 000
20 000
25 000
30 000
1995 1996 1997 1998 1999 2000
ME
uro
s
Subscription TV Public funding Advertising Trend in the US TV market financing
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
1995 1996 1997 1998 1999 2000
in M
Eu
ros
Subscription TV Public funding Advertising
www.idate.org44
The World TV market:an inevitable transition to digital…
Source : IDATE
Number of digital TV households in the World
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
1 996 1 997 1 998 1 999 2 000 2 001
in '0
00
Europe USA Japan RoW
4, 8 million
72 million
www.idate.org55
The World TV market:more than 200 million digital TVHH by the year 2010
Number of digital TVHH in world to the year 2010
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
2 001 2 005 2 010
in '0
00
Europe USA Japan RoW
206 M
72 M
www.idate.org66
The World TV market:and a number of multichannel homes continuously growing
Terrestrial TV reception is loosing groundSource : IDATE
Changes in TV reception modes
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1995 2001 1995 2001 1995 2001
Europe USA Japan
Terrestrial TVHH Cable TVHH Satellite TVHH
www.idate.org77
The World TV market:a sector marked by numerous technical and commercial innovations …
The launch of DTV Investments in digital network roll-out Additional cost caused by analogue/digital simulcast Additional cost induced by increasing competition Additional cost resulting from market « fragmentation »
A wider range of services: More thematic channels NVOD Enhanced TV Transactional iTV services (T-commerce, T-banking, Games) VOD
Commercial/marketing innovations Towards the « TV à la carte » concept Cable : « triple play » offerings
The potential threat of alternative « broadband » networks
Significant investments in
content and network
upgrading
www.idate.org88
The World TV market:a dynamic which has not engendered significant international expansion …
USA
Europe
RoW
83%
10%
7%
Walt Disney
84%
16%
V
Viacom
6%
85%
9%AOL Time Warner
100%
Bertelsmann
56%31%
13%
Vivendi Universal
15%
77%
8%
News Corp.
2001 Turnover geographical breakdown
www.idate.org99
Market restructuring
Major media players
in trouble
Consolidation under way:2001-2002: hard times for audiovisual
Inflation in audiovisual rights (notably in sport and cinema rights)
« Free fall » after over-evaluation on the Stock market
Gap between the offerings proposed and the customers’ expectations
Slow down in the world TV markets’ growth
+ Over-investment due to
digitisation and convergence
www.idate.org1010
Consolidation under way:a TV market « held up » by a diminished growth rate in the TV advertising market and a lower increase in digital TV subscriptions
Source : IDATE
Annual average growth rate observed on the world TV market
0%
2%
4%
6%
8%
10%
12%
Europe USA Japon RoW
ann
ual
ave
rag
e g
row
th r
ate
AAGR 1995-2000
AAGR 2000-2002
www.idate.org1111
Consolidation under way:a trend towards concentration rather than geographical expansion
Services closing down
Market leaders announcing record losses
Mergers and acquisitions on the rise
www.idate.org1212
Questions arising from the current situation …
KEY QUESTIONS
Is it time for consolidation to open the way to pan-European players ?
Is there going to be enough space for new players ?
What are Europe’s main advantages compared to the USA when considering the transition to digital ?
Underlying questions Is the European TV market at the beginning of the consolidation and restructuring
process or, is it now on the way to « stabilisation » ? How will a slower than expected transition to digital impact the sector ? Is the place of « historic » media players going to be in anyway reinforced ? How the current troubles encountered by the major media players will impact the
whole value-added chain, and particularly « upstream » market players ? What exactly could/will consolidation bring to European market players ? How then would be likely to perform Europe on the world TV market?
1
2
3
…