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Australia - Broadcasting and Pay TV

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:

  • Revenue and subscriber statistics;
  • Analyses of market and industry trends and developments;
  • Regulatory and government policy developments;
  • Overviews of key market segments including:
  • Personal Video Recorders;
  • Digital Radio;
  • Interactive TV (iTV);
  • Set-top Boxes (STBs);
  • Podcasting and datacasting;
  • Overviews of major players in the market including:
  • Public and Commercial FTA TV broadcasters;
  • Foxtel;
  • Austar;
  • Austereo;

Free-to-Air BroadcastingMarket conditions and changes to technology have impacted the broadcasting industry over the past 12 months and more so than any other year in the past decade. These conditions are expected to continue to impact the industry through intense competition for viewers and advertising. While the global financial crisis has left its mark on all media, Free TV in Australia weathered the storm better than expected. The formation of Freeview, the launch of Free TV’s new multi-channels and the expansion of the networks’ online and cross platform offerings are set to impact significantly on the industry’s free-to-air offering. 

Over the next five years, digital technologies are set to spread across all segments of the entertainment and media as the digital migrations continue to expand. The FTA networks are expected to see intense competition for viewers and advertising in 2010 and beyond, which will impact on their cost margins as they will be forced to put more money into programming and marketing. TV stations will be forced to market themselves more aggressively due to threats from the new media sector. 

Since 2001, all of the FTA broadcasters have been simulcasting their primary channels in both analogue and digital however, eventually, the analogue transmission will be switched off. The switch-off will be phased throughout Australia, commencing in the first half of 2010 and continuing through until 2013. 

Digital technology like the internet, mobiles and PVRs are providing even more ways for consumers to engage with their favourite shows, complementing the primary broadcast and include additional broadcast broadband offerings such as ABC’s iView. 

Pay TV BroadcastingDue to the high cost of infrastructure, and intense competition from the free-to-air counterparts the two pay TV companies are battling it out to turn revenues into profits. However, the net losses of pay TV’s past are now narrowing and profits being restored. ARPU of both Austar and Foxtel continue to improve, driven by higher tier packages. 

There are more than 90 English-language television services or channels currently available to subscribers of the three major local subscription television groups. The three major local pay TV providers are Foxtel and Optus TV (each of which operate in the metropolitan markets) and Austar (which operates in regional markets). Between them these three operators had a total of more than 2.3 million household subscribers to pay TV broadcasting services in Australia up from 2.2 million household subscribers at 30 June 2008. 

By mid-2009 pay TV penetration had reached 33%, and while growth is expected to continue modestly during 2010 Australian figures are well below those of the developed markets around the world. 

While it is still not impossible for Foxtel to reach the 40% penetration mark, the company can only reach these targets if it either starts offering more attractive price packages or includes a broadband offering within an affordable priced package. 

With the advent of digital television and the launch of a number of new digital free-to-air channels, Australian pay TV operators have been feeling the squeeze as viewers were quick to take advantage of the new conditions. However, in competition Foxtel and Austar have served up to 30 new channels in a bid to attract FTA viewers to their subscriber base. Meanwhile the growing uptake of the iQ recorder is strengthening the value of Foxtel, as subscribers have slightly higher ARPUs. 

The main regulatory issues faced by the industry include the break up of Telstra and anti-hording provisions. Telstra is set for shake-up, its biggest challenge since privatisation, as a result of Federal Government plans that will see the telco split and the introduction of sterner consumer safeguards. Federal Communications Minister Senator Stephen Conroy shocked the industry with his announcement late 2009 that Telstra must structurally separate voluntarily - and if not the Government would force a split under a new regulatory regime. 

Digital TVBy 2009 Digital TV penetration had passed the 50% mark ands steady growth is expected to continue. The free-to-air TV stations have increased their promotion of their digital TV channels and slowly but steadily there is more awareness among the viewers. However, it remains the question if the new channels will attract enough new advertising money to warrant the new investments. Another interesting development to watch is the National Broadband Network, the broadcasters have already shown their interest in the new infrastructure. Increasingly the borders between Digital TV and broadband-based video services will start to blur. 

Interactive TV, IPTV, STBs and Electronic Program Guides have all struggled to gain widespread popularity in Australia. IPTV services are being launched by a number of ISP’s and media companies such as Foxtel and EPGs continue to evolve as mass market content. However concerns remain relating to the emergence of a sustainable revenue model. Targeted advertisements may ultimately prove popular but significant technical and regulatory hurdles remain. 

Radio broadcastingRadio is available over AM and FM frequencies, and almost three-quarters of all radio is commercially operated. The ABC accounts for almost all of the remaining radio audience. There are five major commercial radio broadcasters: Austereo, the Australian Radio Network, Fairfax Media / Southern Cross Broadcasting, DMG Radio Australia and Macquarie Radio Network. All five have established national networks through aggregation. 

The latest statistics on radio usage patterns include a survey on the commercial radio industry. Although its advertising base is growing, the radio market is losing share to other media sectors such as TV. Over the longer term the eventual introduction of digital radio could further pose a threat to the financial viability of the industry. 

Digital radio launched in Australia in 2009 after years of commercial trials. The launch has started in capital cities and will roll-out progressively to other broadcast centres. The cost to the radio industry to provide digital radio services is expected to be roughly between $300 and $400 million. By that time many industry experts believe that the radio industry could be overtaken by new technologies such as wireless Internet radio. Australian commercial radio broadcasters have agreed to adopt the new DAB+ standard for the implementation of digital radio. This annual publication provides an overview of digital radio functionality as well as market analysis and historic information on the development of digital radio in Australia. 

The Digital Media IndustryMost of the media companies have a vested interest in protecting their traditional businesses. Over the last 50 years they have been able to obtain certain political advantages that have allowed them to carve our monopolistic markets. The new digital media are undermining their privileges and their grip on their monopolies. Forced by these changes they are now all jockeying for a position in the new Internet economy. The industry has turned the corner and is now well and truly underway to also dominate the digital media market, launching events using their traditional media and supplementing them through new media activities. However, they will increasingly receive more competition from overseas media companies as well as from the emerging broadband based media companies (blogs, social media and the Internet in general). 

Quality content is now crucial as digital platforms are becoming relatively commoditised. Telcos tried to claim this territory but continue to struggle to leverage their natural advantages. In Australia, alongside the ABC and News, Fairfax Digital has continued to compete for digital viewers. Others include: News Limited, PBL, Seven, Yahoo!7, Ten, Macquarie Southern Cross Media, WIN and Austereo.

The Advertising MarketDefying market expectations, expenditure on online advertisements in Australia grew 18.5% year-on-year. Unabated by the current poor economic environment sales increased to $1.8 billion at the end of the 2009 financial year according to figures from PricewaterhouseCoopers (PwC). More specifically Australia’s online search advertising market achieved a 30% growth rate during 2008/09, with both revenues per ad and the amount of search ads served continuing to rise. 

Buoyed by the increased use of multimedia advertising on the back of improvements in broadband availability has seen advertisers continue to experiment with new formats. 2010 may see increased use of targeted advertising delivered over the internet as well as increased use of mobile internet advertising by firms which has been driven by advances in the capability of multimedia handsets, the increasing use of mobile data services and the fall in the associated costs to the user. Data in this report is the latest available at the time of preparation and may not be for the current year.

1. Free-to-Air TV
1.1 Market overview and statistics
1.1.1 Overview of Digital TV broadcasters
1.1.2 Market trends, developments and analysis
1.1.3 Statistics
1.1.4 Market surveys
1.2 Broadcasters
1.2.1 Market overview
1.2.2 National broadcasters
1.2.3 Regional broadcasting
1.2.4 Community television broadcasting services
1.2.5 Indigenous broadcasters
2. Pay TV
2.1 Industry revenues and analysis
2.1.1 Market analysis
2.1.2 Revenue statistics
2.1.3 ARPU statistics
2.1.4 Infrastructure statistics
2.2 Subscribers, overview and analysis
2.2.1 Market statistics
2.2.2 Industry and market analysis
2.2.3 Forecasts - Pay TV penetration - 2010 - 2012
2.2.4 Major players - overview and major developments
3. Digital TV
3.1 Market overview and statistics
3.1.1 Overview of Digital TV broadcasters
3.1.2 Market trends, developments and analysis
3.1.3 Statistics
3.1.4 Market surveys
3.2 Interactive TV, IPTV, & EPGs
3.2.1 Interactive TV
3.2.2 IPTV and Video-on-Demand
3.2.3 Electronic Program Guides (EPGs)
3.3 Datacasting overview
3.3.1 Regulatory framework
3.3.2 Government digital media reforms
3.3.3 Other market developments
3.3.4 Summary of datacasting developments and trials
3.3.5 Brief history
3.4 Digital Video Recorders
3.4.1 Introduction
3.4.2 Subscriber statistics and forecasts
3.4.3 Market analysis - PVRs are not taking off
3.4.4 Key players and products
3.4.5 DVRs and advertising
3.4.6 Market and regulatory developments (Historic)
4. Digital Media
4.1 Industry overview
4.1.1 The traditional media industry
4.1.2 New business models for digital media
4.1.3 Digital media regulation
4.1.4 Free to Air TV broadcasters
4.1.5 Pay TV operators
4.1.6 Newspaper publishers
4.1.7 News Corp and subsidiaries
4.1.8 Fairfax Digital
4.2 Advertising, statistics, revenues and forecasts
4.2.1 The online advertising market - moving into 2010
4.2.2 Mobile Internet advertising
4.2.3 Generation Y is driving the online media push
4.2.4 Revenue statistics
4.2.5 Online classified advertising
4.2.6 Online search and directories market
4.2.7 Online video advertising market
4.2.8 Website usage statistics
4.2.9 Market surveys
5. Radio
5.1 Digital Radio
5.1.1 Market overview
5.1.2 Market analysis
5.2 Overview and statistics
5.2.1 Market overview
5.2.2 AM/FM and digital
5.2.3 Market trends
5.2.4 Radio usage statistics
5.2.5 2010 statistics
5.2.6 Advertising statistics
5.2.7 Number of radio licences
5.2.8 PWC report
5.2.9 Major players
5.2.10 Overview
5.2.11 ABC
5.2.12 SBS Radio
5.2.13 Austereo Group
5.2.14 Australian Radio Network (ARN)
5.2.15 Fairfax Media/Southern Cross Broadcasting (SBC)
5.2.16 DMG Radio Australia (DMG)
5.2.17 Macquarie Radio Network (MRN)
5.2.18 Macquarie Regional Radioworks
5.2.19 Digital media developments
5.2.20 Market overview
5.2.21 Podcasting and vodcasting
5.2.22 Brief history of radio broadcasting
6. Glossary of Abbreviations
Table 1 - Household conversion to digital TV - 2009
Table 2 - Percentage of digital TV households - Q1 - Q3 2009
Table 3 - Annual unit sales in Australia; plasma and LCD digital TVs - 2003 - 2009
Table 4 - Number of television and radio licences on issue - 2009
Table 5 - Pay TV revenue per operator - 1997 - 2010
Table 6 - Percentage change of pay TV revenue per operator - 1998 - 2010
Table 7 - Pay TV advertising revenue - 2000 - 2013
Table 8 - Net losses pay TV industry - 1996 - 2010
Table 9 - ARPU levels per operator - Austar, Foxtel and Optus - 1999 - 2002; 2003 - 2010
Table 10 - Pay TV industry annual churn rates - 1996 - 2009
Table 11 - Pay TV rollout statistics (homes passed) - 1996 - 1998; 2002 - 2008
Table 12 - Pay TV subscribers by operator - 1995 - 2010
Table 13 - Pay TV subscribers annual change by operator - 1997 - 2010
Table 14 - Pay TV household penetration rate - 1997 - 2010
Table 15 - Pay TV viewing versus FTA channel viewing - October 2009
Table 16 - Forecast pay TV household penetration - lower market growth scenario - 2010 - 2012
Table 17 - Forecast pay TV household penetration - higher market growth scenario - 2010 - 2012
Table 18 - Household conversion to digital TV - 2009
Table 19 - Percentage of digital TV households - Q1 - Q3 2009
Table 20 - Annual unit sales in Australia; plasma and LCD digital TVs - 2003 - 2009
Table 21 - Media centre penetration forecasts - Australia - 2005; 2007; 2010; 2015
Table 22 - DVR subscribers - total market - pay TV and FTA TV - 2006 - 2010
Table 23 - Online advertising revenue and forecasts - 1997 - 2010
Table 24 - Market shares key online advertising markets - 2006; 2009 - 2010
Table 25 - Australian online advertising revenue - 2006 - 2010
Table 26 - Changed in Australian ad revenue by sector - 2007 - 2010
Table 27 - Nielsen top Australian websites by unique audience - July 2009
Table 28 - Users of social networking sites - 2009
Table 29 - Social networking in the workplace - 2009
Table 30 - Social networking among children - 2009
Table 31 - Online chat room use among children - 2009
Table 32 - Australian entertainment and media market revenue by industry - 2007 - 2012
Table 33 - Australian entertainment and media market - annual growth by industry - 2008 - 2012
Table 34 - Australian consumer/end-user spending - 2007 - 2012
Table 35 - Australian consumer/end-user spending - annual growth by industry - 2008 - 2012
Table 36 - Australian advertising spend - 2007 - 2012
Table 37 - Australian advertising spend - annual growth by industry - 2008 - 2012
Table 38 - Australian entertainment and media market revenue by industry - 2006 - 2008; 2011
Table 39 - Australian entertainment and media market - annual change by industry - 2007 - 2008; 2011
Table 40 - Australian entertainment and media market - consumer/end user spending by industry - 2006 - 2008; 2011
Table 41 - Australian entertainment and media market - consumer/end user annual change by industry - 2007 - 2008; 2011
Table 42 - Australian entertainment and media market - advertising spending by industry - 2006 -2008; 2011
Table 43 - Australian entertainment and media market - advertising annual growth by industry - 2007 - 2008; 2011
Table 44 - Share of consumer spending by industry sector - 2006; 2011
Table 45 - Share of advertising revenue by industry sector - 2006; 2011
Table 46 - Paid search advertising revenue - 2005 - 2006; 2010
Table 47 - Radio ad revenue by city - three months to 30 September 2009
Table 48 - Number of commercial and government radio stations
Table 49 - Number of commercial radio services by city
Exhibit 1 - Positive reasons for DTTB adoption - 2009
Exhibit 2 - Reasons for non-adoption of DTTB - 2009
Exhibit 3 - Commercial television licences
Exhibit 4 - Nine Network coverage
Exhibit 5 - Community television licences
Exhibit 6 - Pay TV rollouts by state
Exhibit 7 - New media activities from pay TV operators
Exhibit 8 - Positive reasons for DTTB adoption - 2009
Exhibit 9 - Reasons for non-adoption of DTTB - 2009
Exhibit 10 - ACMA register of datacasting licensees - 2010
Exhibit 11 - Datacasting trial service markets - 2000
Exhibit 12 - Datacasting trial licensees - 2000
Exhibit 13 - Datacasting bidders - 2001
Exhibit 14 - Timeline of music on the Internet
Exhibit 15 - Estimated number of radios in the home
Exhibit 16 - Austereo national networks
Exhibit 17 - Austereo joint ventures
Exhibit 18 - DMG’s full list of radio stations

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