2009 Australia - Broadcasting and Pay TV

Publication Overview

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, Set Top Boxes, podcasting and datacasting;

·         Overviews of major players in the market including: Foxtel, Austar and the FTA networks.

 

Researcher:- Dominic Hebert

Current publication date:- March 2009

Next publication date:- February 2010

Executive Summary

BuddeComm’s annual publication ‘Australia - Broadcasting and Pay TV’ profiles key market sectors in Australia’s free-to-air TV, digital TV, pay TV and radio markets. It provides revenue and subscriber statistics as well comprehensive market overviews in areas such as targeted advertising, personal video recorders, digital radio, Interactive TV, set-top boxes, podcasting and datacasting. 

The report reveals that although the dominance of FTA television as a mass communication medium has been unsurpassed for many decades, the industry is now facing challenges from a number of fronts as incumbent broadcasters cling to their lucrative oligopolies. Digital FTA TV has been held up in a vicious cycle since it was launched in 2001. Digital content, beyond simply offering better picture qualities, has not driven uptake of digital TV. 

Crucial changes are likely to occur with respect to the advertising model employed by FTA and pay TV firms as consumers shift to digital viewing standards. In future, digital services will enable FTA and pay TV to utilise targeted advertising in a similar manner to web based content delivered to PC’s and increasingly, mobile phones. Firms within the industry entertain hopeful prospects of increased revenue per viewer from advertisers. However technical, legal and regulatory impediments remain, delaying the delivery of targeted advertising via FTA and pay TV channels, while telecommunications providers and other new media players continue to prepare their targeted advertising based services. 

FTA and pay TV organisations have close relationships with professional content producers which many web based video providers, such as YouTube, often lack. FTA and pay TV providers have mostly been unwilling to make their content available via the web as the quality of service was deemed unacceptable. However now that broadband with sufficient bandwidth is available to a substantial portion of their viewing audience, FTA and pay TV providers can deliver a quality video experience. This could see these organisations gain significant market share in the IPTV arena in 2009/10.  

Changes to media ownership and broadcasting regulations in Australia have lead to further consolidation of radio operators and increased cross-media ownership. Competition from within and outside the industry, which is already strong, is predicted to increase while trading conditions are likely to be difficult.  

After decades of delays, digital radio has been introduced in Australia. It seems however that the radio innovations for the foreseeable future will come from the Internet and other new media developments rather than from the radio broadcasting industry. 

Key highlights:

Free-to-air TV

·         Marketing and media buyers are increasingly turning to alternative media, such as through Internet and mobile channels in order to reach consumers. 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 more extensive online experience through services such as video-based entertainment.

·         The FTA networks are expected to see intense competition for viewers and advertising in 2009 under difficult trading conditions and beyond, which will impact on margins should organisations 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. Broadcasting’s ad revenues are already gradually being squeezed due to falling audiences and rising costs.

 

Digital TV

·         By 2009, the move towards flat panel TVs had further accelerated with CRT TVs only constituting a very 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 2010 as CRT televisions should by that time be totally phased out by retailers.

·         Household penetration of digital TVs (including STBs, PVRs and integrated digital TV sets), is predicted to rise from 37% in 2008 and 51% by 2009

·         Pay TV DVRs currently dominate the DVR market, with proprietary FTA based recorders (mainly TiVo recorders) taking only a small slice of the market. Of the pay TV market, the Foxtel iQ recorder holds the vast majority.

·         BuddeComm predicts that the launch of Seven’s TiVo recorder will lift the numbers of current FTA PVRs, but not to level significant enough to break out of its niche product status, or to be of any sort of threat to the pay TV PVR model.

 

Pay TV

·         Early indicators show that digitalisation of the service alone has not made a huge difference to pay TV. People continue to look for good content, and in principle, the more channels the better, plus reasonable prices.

·         By 2008 pay TV penetration had only reached 28%, and growth is expected to continue to increase modestly to around 30% by 2010 and 34% by 2012. However this still falls well short of most other developed nations.

·         While it is still not impossible for pay TV penetration to reach the 40% penetration mark, this can only reached if pay TV companies offer more attractive price packages, or include competitively priced broadband.

·         Pay TV revenue growth of 17% was recorded in 2008 and we expect growth to remain reasonably strong in 2009, with a slight drop to around 14%.

 

From 2007 the cost structure of the industry became more sustainable and the industry became broadly profitable. This trend continued in 2008, and is set to continue in 2009, though should Australia experience recessionary conditions, this may temper growth. Despite this, competition from web based media is set to intensify.  

Pay TV subscribers by operator – 2004 - 2009

Year

Austar

Foxtel retail

Foxtel wholesale (Optus & TransACT)

Foxtel total

Others2

Total1

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

1,130,000

140,000

1,270,000

19,000

1,890,100

2007

679,000

1,292,000

151,000

1,443,000

20,000

2,142,000

2008 (e)

733,000

1,395,000

155,000

1,550,000

22,000

2,305,000

2009 (e)

782000

1,492,000

160,000

1,652,000

24,000

2,458,000

(Source: BuddeComm, Telecommunications Strategies Report)

Notes:

1Year ends June.

2Others includes Neighbourhood Cable.

 

Radio

·         Although its advertising base is growing, the radio market is losing share to other media sectors such as TV. FM radio is expected to experience competition among the youth market segment as consumers continue to migrate to web based media and personal music devices. The launch of digital radio in January 2009, is expected to cost the radio sector about $400 million.

·         Rather than looking at it as essential infrastructure technology, which would allow radio broadcasters to run their networks more efficiently and effectively, the industry has concentrated on finding exclusive services that they could offer over this network.

 

Data in this report is the latest available at the time of preparation and may not be for the current year.

 

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

Table of Contents

  • 1. Overview and Analysis
    • 1.1 Free-to-air TV
      • 1.1.1 Market overview and trends
      • 1.1.2 FTA broadcasters
      • 1.1.3 ABC’s iView
    • 1.2 Digital TV
      • 1.2.1 Market trends
      • 1.2.2 Digital Video Recorders (DVRs)
      • 1.2.3 Interactive TV, Set-top Boxes & Electronic Program Guides
      • 1.2.4 Datacasting
    • 1.3 Pay TV
      • 1.3.1 Subscriber statistics and analysis
      • 1.3.2 Revenue statistics
    • 1.4 Radio
      • 1.4.1 Market trends
      • 1.4.2 Market statistics
      • 1.4.3 Digital radio
  • 2. Free-to-Air TV
    • 2.1 Market trends and analysis
      • 2.1.1 FTA industry faces increasing challenges
      • 2.1.2 Social networking isn’t diminishing TV viewing patterns
    • 2.2 Market statistics and revenue
      • 2.2.1 Introduction
      • 2.2.2 TV viewing statistics
      • 2.2.3 Advertising market statistics
      • 2.2.4 Four-year predictions to 2012
    • 2.3 Film spending and production
    • 2.4 Financial overviews
      • 2.4.1 Financial trends in the commercial television industry
      • 2.4.2 Commercial TV
      • 2.4.3 Historical revenues
    • 2.5 Free-to-Air TV broadcasters market overview
    • 2.6 National broadcasters
      • 2.6.1 Public broadcasters
      • 2.6.2 Commercial networks
    • 2.7 Regional broadcasting
      • 2.7.1 Commercial television broadcasting licences
      • 2.7.2 Regional licence area plans
      • 2.7.3 Television aggregation
      • 2.7.4 Major players
    • 2.8 Community television broadcasting services
    • 2.9 Indigenous broadcasters
      • 2.9.1 Imparja Television
      • 2.9.2 National Indigenous Television Service (NITV)
      • 2.9.3 Warlpiri Media Association, Yuendumu, Western Desert
      • 2.9.4 Ernabella, north western South Australia
      • 2.9.5 Radio 4aaa Murri Country, Brisbane
  • 3. Digital TV
    • 3.1 Market trends and developments
      • 3.1.1 Digital television – slow but steady growth
      • 3.1.2 Seven and Ten’s digital FTA HD channels
      • 3.1.3 Market trends on new digital channels
      • 3.1.4 Freeview
    • 3.2 Market analysis
      • 3.2.1 Digital TV switchover in 2013 will prove challenging
    • 3.3 Market statistics and forecasts
      • 3.3.1 Statistics
    • 3.4 Market surveys
      • 3.4.1 Canon Digital Lifestyle Index survey
      • 3.4.2 The connected home
      • 3.4.3 ACMA’s Digital Television in Australian Homes report
    • 3.5 Market analysis
      • 3.5.1 Are we backing the wrong horse with HD?
      • 3.5.2 Patchy digital TV reception – yet another stumbling block
    • 3.6 Regional overview of broadcasters
    • 3.7 Government digital strategy plans
      • 3.7.1 Digital TV regional switchover timetable
      • 3.7.2 Governmen’s digital TV strategy 2008
      • 3.7.3 Government’s digital action plan 2006
      • 3.7.4 Broadcasting Legislation (Digital Television Switchover) Bill 2008
    • 3.8 Technological environment
      • 3.8.1 Digital TV standards
      • 3.8.2 Single Frequency Network options for digital TV
    • 3.9 DVRs
      • 3.9.1 Introduction
      • 3.9.2 Subscriber statistics and forecasts
      • 3.9.3 Market analysis
      • 3.9.4 Free-to-air DVRs
      • 3.9.5 DVR analysis
      • 3.9.6 Pay TV DVRs
      • 3.9.7 Television advertising
    • 3.10 Interactive TV
      • 3.10.1 Market overview
      • 3.10.2 Definitions
      • 3.10.3 The future of VoD – analysis
      • 3.10.4 iTV analysis
    • 3.11 Set-top boxes
      • 3.11.1 Market overview by sector
      • 3.11.2 Analysis
      • 3.11.3 Market and regulatory developments
    • 3.12 Electronic Program Guides (EPGs)
      • 3.12.1 Introduction
      • 3.12.2 The EPG market
      • 3.12.3 Key players
    • 3.13 Datacasting overview and analysis
      • 3.13.1 Regulatory framework
      • 3.13.2 Government digital media reforms
      • 3.13.3 Other market developments
  • 4. Pay TV
    • 4.1 Market overview
    • 4.2 Market statistics
      • 4.2.1 Subscriber statistics
      • 4.2.2 Telstra bundled pay TV services – 2008
      • 4.2.3 Consumer penetration statistics
      • 4.2.4 Pay TV viewing statistics
      • 4.2.5 Historical statistics
    • 4.3 Penetration analysis
    • 4.4 Forecasts – pay TV penetration to 2011
      • 4.4.1 Scenario 1 – lower pay TV subscriber growth
      • 4.4.2 Scenario 2 – higher pay TV subscriber growth
    • 4.5 Major players – overview and major developments
      • 4.5.1 Market overview
      • 4.5.2 Foxtel
      • 4.5.3 Optus
      • 4.5.4 Austar
      • 4.5.5 SelecTV
    • 4.6 Market analysis
      • 4.6.1 Expensive pay TV vulnerable to economic downturn
    • 4.7 Revenue statistics
      • 4.7.1 Revenues
      • 4.7.2 Advertising revenue
      • 4.7.3 Revenue analysis
      • 4.7.4 Pay TV now on a solid profitable basis
    • 4.8 ARPU statistics
    • 4.9 Churn statistics
    • 4.10 Infrastructure statistics
      • 4.10.1 Availability
      • 4.10.2 Infrastructure costings
  • 5. Radio
    • 5.1 Overview and statistics
    • 5.2 Market overview
      • 5.2.1 AM versus FM
      • 5.2.2 Market trends
      • 5.2.3 Radio Usage statistics
      • 5.2.4 2007 statistics
      • 5.2.5 Advertising statistics
      • 5.2.6 Number of radio licences
      • 5.2.7 PwC report - 2007
      • 5.2.8 Market statistics – 2006
    • 5.3 Market surveys
      • 5.3.1 CRA survey on AM radio
    • 5.4 Financial statistics
    • 5.5 Major players
      • 5.5.1 Overview
      • 5.5.2 ABC
      • 5.5.3 SBS Radio
      • 5.5.4 Austereo Group
      • 5.5.5 Australian Radio Network (ARN)
      • 5.5.6 Fairfax Media / Southern Cross Broadcasting (SBC)
      • 5.5.7 Mytalk
      • 5.5.8 DMG radio Australia (DMG)
      • 5.5.9 Macquarie Radio Network (MRN)
      • 5.5.10 Macquarie Regional Radioworks (MRR)
    • 5.6 Digital media developments
      • 5.6.1 Podcasting and Vodcasting
    • 5.7 Digital radio
      • 5.7.1 Market overview
      • 5.7.2 Market analysis
      • 5.7.3 Market surveys
      • 5.7.4 Development path of digital radio
      • 5.7.5 Features and benefits of digital radio
      • 5.7.6 New and alternate delivery channels
      • 5.7.7 Technologies
  • 6. Glossary of Abbreviations
  • Table 1 – Television set penetration by number of sets – 2008
  • Table 2 – TV ratings for pay TV & FTA providers – market share – March 2008
  • Table 3 – Pay TV viewing versus FTA channel viewing – April 2007
  • Table 4 – Percentage shares of capital city TV ad market – 1998 - 2008
  • Table 5 – Advertising spending by media sector and annual change – 2006 - 2007
  • Table 6 – Advertising revenue share for commercial networks – January-June 2007
  • Table 7 – Australian entertainment & media market revenue by industry – 2007 - 2012
  • Table 8 – Australian entertainment & media market – annual growth by industry – 2008 - 2012
  • Table 9 – Australian advertising spend – 2007 - 2012
  • Table 10 – Australian advertising spend – annual growth by industry – 2008 - 2012
  • Table 11 – Australian commercial TV revenue and expenditure – 1992 - 2007
  • Table 12 – Advertising revenue for commercial networks – January-June 2007
  • Table 13 – Commercial television programming spending – 2003 - 2007
  • Table 14 – TV broadcasting revenue and expenditure growth – 1996 - 2005
  • Table 15 – Commercial TV revenues by broadcaster – 1998 - 2005
  • Table 16 – Commercial TV broadcasters’ revenues as share of total – 1998 - 2005
  • Table 17 – Broadcasting and commercial licence fees collected by ACMA – 1997 - 2005
  • Table 18 – Rebates claimed under the Regional Equalisation Plan – 1998 - 2004
  • Table 19 – Number of television and radio licences on issue – 2008
  • Table 20 – Number of television licences on issue (historical) – 1999; 2001 - 2004
  • Table 21 – Digital TVs and integrated digital TV sets sold – 2003 - 2009
  • Table 22 – Average monthly sales volume of digital TV receivers – 2005 - 2007
  • Table 23 – Household penetration of digital TVs – 2005 - 2009
  • Table 24 – Number of digital TV households – 2001 - 2009
  • Table 25– Percentage of homes with access to digital TV – 2007
  • Table 26 – DTTB FTA household take-up – 2005 - 2007
  • Table 27 – DTTB FTA or pay TV household take-up – 2007
  • Table 28 – National pay TV penetration – 2005 - 2007
  • Table 29 – Percentage of homes with DTTB cable sets – 2005 - 2007
  • Table 30 – DTTB hardware breakdown – 2007
  • Table 31– DTTB penetration by region – 2007
  • Table 32 – Equipment used to record digital FTA TV (national) – 2007
  • Table 33 – Downloading of audiovisual content in last month (national) – 2006 - 2007
  • Table 34 – Media centre penetration forecasts – 2005; 2007; 2010; 2015
  • Table 35 – DVR subscribers, total market, pay TV and FTA TV – 2006 - 2009
  • Table 36 – Pay TV subscribers by operator – 1995 - 2010
  • Table 37 – Pay TV subscribers annual change by operator – 1997 - 2010
  • Table 38 – Telstra pay TV bundling subscribers and annual change – 2006 - 2008
  • Table 39 – Pay TV household penetration – 1997 - 2010
  • Table 40 – Pay TV viewing versus FTA channel viewing – April 2007
  • Table 41 – Market share of pay TV viewing in pay TV households – 2006 - 2007
  • Table 42 – Forecast pay TV HH penetration, lower market growth scenario – 2005 - 2012
  • Table 43 – Forecast pay TV HH penetration, higher market growth scenario – 2005 - 2012
  • Table 44 – Pay TV revenue per operator – 1997 - 2010
  • Table 45 – Percentage change of pay TV revenue per operator – 1998 - 2010
  • Table 46 – Telstra pay TV bundling revenue and annual change – 2006 - 2008
  • Table 47 – Pay TV advertising revenue – 2000 - 2009
  • Table 48 – Net losses pay TV industry – 1996 - 2009
  • Table 49 – Austar, Foxtel and Optus ARPU - 1999/2002; 2003 - 2010
  • Table 50 – Pay TV industry annual churn rates – 1996 - 2009
  • Table 51 – Pay TV roll-out statistics (homes passed) – 1996 - 1998; 2002 - 2008
  • Table 52 – Average time spent listening by radio users per week by device – November 2007
  • Table 53 – Radio ad revenue by city – nine months to 31 March 2007
  • Table 54 – Number of commercial and government radio stations – 2008
  • Table 55 – Commercial radio penetration and time spent listening – 2008
  • Table 56 – Time spent listening by capital city (excluding Canberra, Hobart, Darwin) – 2008
  • Table 57 – Audience penetration by time of day – 2008
  • Table 58 – Radio listening by radio location – 2001 - 2008
  • Table 59 – Australian commercial radio financial results and annual profit change – 1992 - 2007
  • Table 60 – Number of commercial radio services by city
  • Exhibit 1 – Commercial television licences - 2008
  • Exhibit 2 – Nine Network coverage
  • Exhibit 3 – Regional licence area plan update
  • Exhibit 4 – Community television licences
  • Exhibit 5 – Public television stations funding – 2003 - 2004
  • Exhibit 6 – Services expected on Australian digital TV – 2008
  • Exhibit 7– Top four reasons for DTTB adoption nationally - 2007
  • Exhibit 8 – Nature of purchases: intentional or passive adoption of digital TV – 2007
  • Exhibit 9 – Top four reasons for non-adoption of digital TV nationally – 2007
  • Exhibit 10 – Digital TV broadcasters by region
  • Exhibit 11 – ACMA register of datacasting licensees – 2006
  • Exhibit 12 – New media activities from pay TV operators
  • Exhibit 13 – Pay TV roll-outs by state
  • Exhibit 14 – Estimated number of radios in the home
  • Exhibit 15 – Austereo national networks – 2006
  • Exhibit 16 – SBC/Fairfax media – key radio stations
  • Exhibit 17 – Timeline of music on the Internet

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Number of pages 147

Status Archived

Last updated 3 Mar 2009
Update History

Analyst: Stephen McNamara

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