Pay TV is maturing but what about Netflix?

Central & Eastern European pay-TV markets are now approaching maturity with pay-TV penetration now at well over half of all TV households in the region.

The number of cable TV subscribers in most of the region’s territories are stagnating, but cable TV will remain Eastern Europe’s leading pay-TV platform for the foreseeable future. Slow progress in implementing digital upgrades means that a substantial proportion of subscribers will remain analog by the end of 2021, and this seriously limits the services on offer. As a result, cable is at a disadvantage against digitally-delivered platforms, and therefore cable is expected to continue to lose market share to rival services. The DTH market is now settling after years of numerous new low-cost service launches. As a result, ARPU levels that have been experiencing ongoing declines are now beginning to decrease more slowly and are expected to stabilize towards the end of the forecast period. The overall outlook is steady growth across both subscriber numbers and ARPU, and Ovum expects the value of the pay-TV market will continue to grow up to and including 2021.

Understandably with the launch of Netflix everywhere this year, there has been a lot of talk about the potential for Netflix to succeed, or fail, in CEE region.

Netflix launched with a one-size-fits-all English version has language only and with some content missing due to rights being held by other providers in the region—leading some to claim that Netflix is ‘not relevant’ in the CEE region. However, through the summer Netflix has been racking up content rights and rolling out local language localisation of its services, with Poland and Turkey first out the door and no doubt more markets to follow this year, as well as signing deals with local telcos. Clearly, Netflix is pursuing the same tried and tested strategy in the CEE region as it has done in its 60+ pre-2016 markets.

Yes, it is still early days for OTT – and so far premium OTT has not presented a significant risk to traditional pay-TV in Eastern Europe. But operators should expect Netflix to develop into a sizable competitor within the next 1-3 years. Ovum is of the firm opinion that Netflix will not only be popular in CEE as in West, but that Netflix will go on to cause serious disruption to established TV markets. In our latest Global SVOD Service Provider forecasts, we estimate that the CEE region will end 216 with more than 6 million SVOD subscribers across all SVOD providers, out of which Netflix will own more than 2 million subscribers. Now is not the time to be in denial and bury head in the sand – Netflix will succeed in the CEE region just as it has done elsewhere!


Hear more at Digital TV Central and Eastern Europe taking place from 25th-26th October, Budapest, Hungary.

Tony Gunnarsson

Further Reading

Central & Eastern Europe TV: Maturity approaches, but region remains ripe for further exploitation (Ovum report September 2016)

SVOD Service Provider Market Share analysis: Europe (Ovum, September 2016)

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