Market Insight

Turkish pay TV penetration soars to 35 per cent

December 21, 2012

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Principal Research Analyst, Service Providers & Platforms

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Turkish pay TV penetration increased from 28.72 per cent to 34.7 per cent in the year to 30 September, according to data published this week by the country’s telecoms regulator, BTK. Satellite operator Digiturk added almost 700,000 subscribers from the previous quarter (a 28 per cent rise). The other satellite operator, D-Smart, achieved an even more impressive growth rate of 48 per cent, while IPTV operator TTNET posted an astonishing 310 per cent increase in the last 12 months. Digiturk accounted for more than half (52 per cent) of the pay TV market, leaving D-Smart a distant second half of its rival’s share (26 per cent), followed by cable operator Turksat (20 per cent) and TTNET (two per cent). Total pay TV revenues for this quarter were 57 million Turkish liras (€24m) but the regulator did not provide a revenue split between the operators.

Turkey is a dynamic pay television market with high prospects for growth. According to IHS Screen Digest data, pay TV households in the country will go from 5.5m at the end of 2012 to 6.9m in 2017, experiencing a 25 per cent growth in a five-year period. Pay TV revenues for the same five-year time-frame will rise from almost €765m in 2012 to €1,309m in 2017, an impressive increase of 71 per cent. The main reason for this explosive growth, is an increase in subscriber numbers and the move of a significant part of these subscribers to higher cost packages. We predict that annual ARPU will go from €154 in 2012 to €191 in 2017, a 24 per cent rise. Another parameter that deserves to be taken into account is the potential of the Turkish economy: IHS Global Insight forecasts a 55 per cent increase in nominal GDP between 2012 and 2016.

Focusing on the pay TV operators, the story of the Q3 2012 data is one of winners and losers. Figures for Turksat, the cable TV operator show a stagnation for the last four years at least. Between Q3 2011 and Q3 2012, growth rate was an almost negligible 0.97 per cent (from 1,236,000 subscribers to 1,249,000 in a 12-month period). The reasons might be the unattractive content offer and the severe competition it faces from the satellite operators, from TTNET’s IPTV service and, lately, from the over-the-top (OTT) newcomer, Turk Telekom’s Tivibu. All the other pay TV operators in Turkey seem to rest on the winners’ side of the equation.

The pay TV leader, and the largest pay TV operator in the country for the last decade, is satellite operator Digiturk. Digiturk has managed to compete succesfully in the pay TV arena overtaking all its competitors primarily because it acquired the most sought-after premium content – football - in Turkey. Digiturk holds exclusive rights for the SporToto Super League (Turkey’s Premier League) until the end of the 2013-2014 season and aired this summer’s Euro 2012 finals and the London Olympics. Digiturk this year launched its own OTT service called Digiturk IQ offering a Humax-manufactured hybrid set-top box. The Digiturk IQ  service offers catch-up TV , VoD and access to a portal where subscribers can browse the internet. The pay TV operator plans to launch a brand new set-top box in Q1 2013, this time partnering with Sagemcom. Digiturk has also teamed up with Octoshape for the provision of a linear OTT video multicast broadband platform. This ‘TV Everywhere’ development will assist Digiturk in offering internet video streaming services for the Turkish League matches it covers to a plethora of IP-enabled devices.

D-Smart is a subsidiary of Dogan Media Group, the largest Turkish media conglomerate which controls also the country’s most popular free-to-air channels. D-Smart’s subscribers stood at 1,648,000 in Q3 2012 but this figure comprises a significant amount of free subscribers (where the service is funded by advertising revenues and also by pay per view charging). Pay subscribers were 817,000, up 48 per cent from Q3 2011.

Turk Telekom’s IPTV service, TTNET increased from 29,000 subscribers in Q3 2011 to 119,000 in Q3 2012. According to IHS Screen Digest data, almost 6.5m households in Turkey (out of a total of 18m) have a broadband connection. The IPTV service offers around 100 channels, 20 of them in HD. At the same time Turk Telekom’s OTT service, Tivibu, has attracted more than a million viewers. Turk Telekom officials believe that real potential lies with IPTV as the service is providing value to the company (is not only a churn reducer but it is providing much needed cash for fueling Turk Telekom’s ambitious expansion plans).

Digiturk D-Smart TTNET Turksat
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