For those needing high level strategic information and objective analysis of Australia’s FTA TV, Digital TV, Pay TV and radio markets in Australia, this report provides essential reading and gives in-depth information on:
BuddeComm’s 2007 Broadcasting and Pay TV Annual Publication, profiles key market sectors in Australia’s Free-to-Air (FTA) TV, Digital TV, Pay TV and radio markets. It provides revenue and subscriber statistics as well comprehensive market overviews in areas such as Personal Video Recorders (PVRs), digital radio, Interactive TV, Set-top Boxes and datacasting.
The report reveals that FTA television industry is now facing challenges from a number of fronts as incumbent broadcasters cling to their lucrative oligopolies. Marketing and media buyers are increasingly turning to alternative media, such as through Internet and mobile channels in order to reach consumers. Digital FTA TV has been held up in a vicious cycle since its launch. Available digital content, beyond simply offering better picture qualities, has been nowhere near sufficient to help drive digital TV. The main driver of growth has been ‘user experience’ delivered by DVDs and plasma screens.
By early 2007 with the vast majority of subscribers on digital services, pay TV penetration had only reached just over 25% and we expect penetration to reach only 26% in 2007. An overall pay TV revenue growth of 15% was recorded in 2006 and we expect growth to remain reasonably strong in 2007, while not increasing. A launch date for digital radio of 2009 is scheduled for Australia.
The Internet will become increasingly entertainment-based as broadband penetration is predicted to continue to rise steadily over next few years. Consumers will be demanding a richer and extensive online experience through services such as video based entertainment.
During the six years from 2001 to 2006, viewing of FTA television fell by over 11%, while overall TV viewing increased, mainly driven by the rise of pay TV. The FTA networks are expected to see intense competition for viewers and advertising in 2007 and beyond, which will impact on their cost margins as they will be forced to put more money into programming and marketing.
TV stations must market themselves more aggressively due to threats from the new media sector. Broadcasting ad revenues are already gradually being squeezed due to falling audiences and rising costs.
Australian audiences have increasing choice and control over when, where and how they consume media. These choices have been facilitated by the rise of technologies such as digital media players (iPods and MP3 players), digital personal video recorders, and video and audio downloads. From 2002 to 2006, subscription television increased its average audience by approximately 30%. This increase has been at the expense of FTA networks.
By the beginning of 2007, penetration of digital TVs (digital receivers or digital integrated TVs) stood at only 25% of Australian households, which still classifies digital TV as a niche medium.
The main driver of growth has been ‘user experience’ delivered by DVDs and plasma screens. This has been a bigger driver for digital TV devices than digital TV itself.
Rate of adoption increased significantly in 2006 as the price of widescreen TVs (plasma and LCD) dropped to below $2000 at the lower end of the market.
By early 2007, the move towards flat panel TVs had further accelerated with CRT TVs only constituting a small proportion of TV sales as the price of the smaller screen LCD TVs and standard definition plasmas had dropped further. This trend will continue to accelerate through to 2008 as CRT televisions are totally phased out by retailers.
The estimated number of free to view digital television receivers sold to retailers and installers in the Australian market during the period 1 October to 31 December 2006 reached 302,000 units, raising the cumulative total sales figure since digital television transmissions began to over 2.3 million.
With the introduction of digital pay TV, the industry only saw modest growth through 2004 and 2005. Growth in 2006 in fact even slowed a bit further.
By early 2007 with the vast majority of subscribers on digital services, penetration had only reached just over 25% and we expect penetration to reach only 26% in 2007.
While it is still not impossible for pay TV reach the 35-40% penetration mark, this level can only be reached these targets if more attractive price packages are offered, or a broadband offering within an affordable priced package is offered. So far both Foxtel and Telstra have not been able to come up with such attractive packages.
For the year to December 2006, pay TV subscribers in Australia increased by just over 9%, only a modest increase on the previous year. A similar growth pattern is expected to continue further into 2007 and 2008.
An overall pay TV revenue growth of 15% was recorded in 2006 and we expect growth to remain reasonably strong in 2007, while not increasing.
Pay TV subscribers by operator - 2004 - 2007
Year Austar* Foxtel**
(Optus & TransACT) Foxtel**
total Others Total
2004 490,000 930,000 186,000 1,116,000 12,500 1,618,500 2005 534,000 1,025,000 157,000 1,182,000 15,000 1,731,000 2006 601,100 1,129,000 140,000 1,269,000 19,000 1,889,100 2007 (e) 661,200 1,219,000 130,000 1,349,000 20,000 2,030,200
Note:*year ends December; **year ends June.
Although its advertising base is growing, the radio market is losing share to other media sectors such as TV.
The declining power of FM radio is expected to be a key trend during 2007 and beyond. FM stations will be in danger of becoming less relevant to the youth market, as teenagers will increasingly turn to alternate new media channels such as the Internet for their music.
Digital radio will allow multi-channelling by existing and possibly new radio companies as advertisers will find it increasingly expensive to achieve broad audience reach.
In early 2007 the Federal Government was in the process of drafting digital radio legislation, setting the date of 1 January 2009 for the launch of digital radio services in Sydney, Melbourne, Brisbane, Adelaide, Perth and Hobart.
By early 2007, CRA was continuing with its digital radio trial in Sydney, while Macquarie Bank’s Broadcast Australia was running a similar trial in Melbourne.