Market Insight

Cypriot telco launches IPTV service in Greece

December 09, 2013

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Associate Director, Service Providers & Platforms, IHS Markit

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Cyta Hellas, a subsidiary of the Cyprus Telecommunications Authority (Cyta), is planning the launch of a triple-play IPTV service in Greece starting this month. Cyta already offers an IPTV service in its home country, where it is now the largest pay TV operator with 55,000 subscribers at the end of Q3 2013.

Cyta is offering six triple-play packages: four ADSL packages (ranging in broadband speed from 4 to 24 Mbps) and two VDSL packages ranging from 35 to 50 Mbps. All triple-play packages include the basic TV bouquet of 40 channels. The ADSL packages are priced from €19 per month (for the introductory 4 Mbps package) to €41 pm (the all-inclusive 24 Mbps package). The VDSL packages are priced €35 a month (35 Mbps) and €50 (50 Mbps).The Cypriot operator is providing two more packages of channels as an add-on to any of the six triple-play packages: a general entertainment add-on package providing channels like Fox, Fox Life and Disney Junior for an extra monthly charge of €3 and the adult add-on package for an extra €9.

Cyta's main target groups are Cypriots living in Greece. With the exception of the public service broadcaster's flagship channel, RIK One, no other Cypriot channel is currently available in Greece. Cyta is planning to broadcast the Cypriot League, rights to which are owned by Cyta for both Cyprus and Greece. The launch of another pay TV operator is a clear indication that the Greek pay TV market is on the road to maturity. 

Cyta will be the fourth operator to offer an IPTV service in Greece in 2013 after OTE TV, Hellas On Line (HOL) and On Telecom. Does it make any sense in a country so badly mauled by recession for a company to invest in order to launch a pay TV service? According to official statistics published by Eurostat and adopted by the OECD, Greece suffered a staggering 25% drop in GDP between 2008 and 2013 and unemployment rates went over 28% in Q3 2013. In other southern European countries also severely battered by recession like Italy and Spain pay TV customers numbers have fallen and there are gloomy prospects for any potential new operator interested in entering the pay TV market.

Yet, the pay TV market in Greece is still heathy. According to IHS Television Intelligence, pay TV penetration in the country was just 10.31% in 2008 (first year of the recession) and rose to 16.07% in 2013. That represents a rather impressive 56% growth. In the case of Greece we are experiencing a bizarre phenomenon where pay TV defies the economic recession.

The disposable income of the average Greek household has experienced a steep decline between 2008 and 2013. The major victim of this trend was entertainment activities outside of the house (like visiting theatres and cinemas, attending concerts or even dining at restaurants and bars) that were severely cut. As a result many Greeks resort to in-house entertainment, with television being the main beneficiary. However, the free to air commercial channels were not in a bargaining position as their advertising revenues have been hit by the crisis. Having much less money to spend on new programming, free-to-air channels end up offering cheap, low-quality and unappealing content. The pay TV operators, on the other hand, have invested heavily in deals with some of the major international channel providers like Fox, Disney and Viacom.

The pay TV operators have recently discovered that they possess another advantage: their subscribers are the most sought-after target group for advertisers. The average pay TV customer has a medium to high income, is well-educated and aged between 35 and 55 years old. The pay TV operators are the only broadcasters in Greece that can currently deliver this target group to the advertisers. In a TV advertising market that has plummeted during the recession (according to IHS Advertising Intelligence, TV advertising revenues have declined from €668 million in 2007 to €333 million in 2013, a 50% drop), both Forthnet and OTE TV have announced that their advertising income has risen.

Another factor that has contributed to the growth of pay TV in Greece is the competition between the two major operators, Forthnet and OTE. OTE's strategy as a newcomer (it launched its IPTV service in Q4 2008 and its satellite service in Q4 2011) in order to challenge Forthnet's dominant position was to offer low-cost packages containing premium content (mainly international football). On average, OTE TV packages were between 30% and 40% cheaper than those of Forthnet. OTE TV's pricing policy had a beneficial effect on the whole pay TV market as households that previously did not have an incentive to consider subscription to a pay TV package were lured by the low cost the Deutsche Telekom-controlled telco was offering. Forthnet's response to OTE TV's challenge was threefold: lowering by around 10% the price for all its packages, re-drawing its premium packages and dynamically marketing its triple-play offer (at Q3 2013 around 60% of Forthnet's pay TV customers subscribed to a triple-play offer). At the end of 2012, according to IHS data, the pay TV operator split in Greece was as follows: Forthnet (satellite plus digital terrestrial) 73.37%, OTE TV (satellite plus IPTV) 22.16%, On Telecoms (IPTV) 2.68% and HOL (IPTV) 1.79%. The most recent figures (Q3 2013) are indicating a shortening of the gap between OTE TV and Forthnet, while the two small IPTV operators are further marginalised: Forthnet (satellite plus digital terrestrial) 64%, OTE TV (satellite plus IPTV) 33.246%, On Telecoms (IPTV) 1.27% and HOL (IPTV) 1.49%.

Forthnet and OTE are ready to beef up their offers as both operators are planning to launch multiscreen-OTT services in 2014. Forthnet has already announced the Nova Go service which will be available to all Forthnet subscribers through their PCs, laptops, pads or smartphones. OTE recently presented its new PVR set-top box (Technicolor DSI 810) while the company has officially announced plans to invest up to €1.2 billion in the next four years in the roll-out of next-generation-networks (NGN) and in enriching its pay TV business. As a telco, OTE owns a large part of the country's broadband and mobile infrastructure and recently OTE officials have revealed that, as a result of the company's investments, VDSL broadband (through a FTTC service) up to 50 Mbps is available to one million households while its mobile broadband 4G LTE network covers over 50% of the Greek population.

Organization
CYTA Forthnet OTE
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