VOD, PPV will be fastest growing sectors of TV market: PricewaterhouseCoopers

Video-on-demand (VOD) and pay-per-view (PPV) will be the fastest growing categories in the TV market, each averaging double-digital annual increases in Canada, according to a new report by PricewaterhouseCoopers. Global Entertainment and Media Outlook: 2004-2008 also predicts that by 2008 they will account for 11% of TV spending. The report also sees good growth in premium subscription services. The report notes that the premium market has been boosted by more offerings on digital cable and direct-to-home satellite TV and by the migration of subscribers to those platforms. "The migration reflects the fact that digital gives subscribers greater choice at a less-than-proportional price increase, thereby resulting in a lower average cost per channel," reads the report. MoviePix and TMN are the most popular premium services in Canada, with more than 1 million subscribers, and PricewaterhouseCoopers forecasts that premium subscription spending will average a 9% compound annual increase for the 2004-08 period, and by 2008 premium spending in Canada will total an estimated $879 million. The report notes that premium spending will likely increase 14.9% in 2004, but afterward with the majority of subscribers already on digital, growth in the digital universe will slow and it will drop to single-digit gains. Multichannel Households* (Millions) in Canada1999200020012002200320042005200620072008Analog Cable7.87.57.15.04.04.03.02.21.51.0Digital Cable0.20.50.71.32.02.83.64.34.95.4Total Cable8.08.07.87.37.06.86.66.56.46.4DTH/Other0.61.01.62.02.42.73.03.33.63.8Total Multichannel8.69.09.49.39.49.59.69.810.010.2TV Households11.311.511.711.811.912.012.112.212.312.4Multichannel Penetration (%)76.178.380.3 78.879.079.279.380.381.382.3* Annual averages As in the premium market, more PPV selections leads to higher buy rates, notes the report. PPV spending rose 23% in Canada to $155 million in 2003, more than three times the market in 1999. PricewaterhouseCoopers predicts double-digit gains through 2006, and for PPV to have reached $267 million in 2008. That represents an 11.5% compound annual increase. The fact that films don’t appear on VOD until after they are released on home video will limit the potential for VOD, according to the report. "Nevertheless, as the digital cable market expands, the potential for VOD will increase. Once the novelty effect wears off, spending per household, which averaged $125 in 2002, will trend down to less than $60 annually," the report notes in the section on Canada. The report predicts that the number of VOD households will increase to 2 million in 2008, representing 37% of the digital cable universe, up from 15% in 2003. Even with a drop in spending per household on VOD, the report forecasts that the overall VOD market will quadruple to $114 million a year in 2008. Overall spending on VOD was $26 million in 2003, double that of a year earlier. Overall, the TV distribution business in Canada will rise to $3.4 billion in 2008, representing a 6.1% compound annual increase, predicts PricewaterhouseCoopers. The report also states that over-the-air TV stations in Canada will continue to lose viewers to specialty channels, but that a stronger advertising market will lead to a modest uptick in growth compared with the past five years. It predicts that broadcast advertising will increase at a 3.9% compound annual rate to reach $1.9 billion in 2008. It also sees subscriber fees for special channels, fueled by growth in the digital universe, to rise to $1 billion in 2008, a 7.9% compound annual increase. It forecasts pay licence fees to jump an estimated 9.1% compound annual rate to $443 million. Video-on-Demand in Canada*2002200320042005200620072008Digital Cable Subscribers (millions)1.32.02.83.64.34.95.4VPD Households (millions)0.10.30.50.71.01.52.0VOD Penetration (%)7.715.017.919.423.330.637.0Annual Spending per Household (US$)125867164615757Aggregate Annual Spending (US millions)132636456186114* At average 2003 exchange rates. In terms of overall global entertainment and media spending, Canada was the fastest-growing during the past three years, averaging 6.2% growth compared with 3.4% growth collectively for the other four regions studied in the report. The report contains an analysis for the United States; Europe, Middle East and Africa (EMEA); Asia/Pacific; Latin America; and Canada, and covers such areas as filmed entertainment, TV broadcast: networks and cable, TV distribution, recorded music, radio and out-of-home advertising, Internet advertising and spending, video games, business information, magazine publishing, newspaper publishing, and theme parks and amusement parks. In 2003, spending on global entertainment and media in Canada increased 5.9% to $23.6 billion, notes the report. "Double-digit increases in video games, filmed entertainment, and the Internet plus high-single-digit increases in TV networks, TV distribution, and radio/out-of-home advertising led the way, offsetting decreases in recorded music and consumer books and increases of less than 3% in business information, newspaper and magazine publishing, educational and professional books and training, and theme parks.

VOD, PPV will be fastest growing sectors of TV market: PricewaterhouseCoopers

Broadcast | August 17, 2004

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