2012 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 (iTV).
  • Overviews of major players in the market including:
    • Public, Commercial and Community FTA TV broadcasters;
    • FOXTEL;
    • AUSTAR;
    • Southern Cross Media Group;
    • Fairfax;
    • Seven West Media.

Researcher:-Stephen McNamara
Current publication date:- March 2012 (13th Edition)

 

Executive Summary

Smart connected TVs and online streaming are a threat to the pay TV industry

With subscription TV household penetration still around 30%, more content available online through IPTV, the extra FTA channels available for viewing under digital TV, the NBN rollout and faster broadband and the availability of digital radio, the broadcasting industry will need to change over the coming years if it is to attract and retain the audiences that have increased over the last 50 years.

Being progressed by the analogue switch-off that is being phased throughout Australia, as it commenced in the first half of 2010 and continues through until 2013 when analogue TV broadcasts will have ceased. We are seeing more and more Australians now enjoying the extra features and channels that are available as digital transmission first commenced back in 2001 and in 2011 celebrated 10 years of operation. A number of regions have now switched completely from analogue to digital, and of these regions most have hit 100% household penetration leading up to the changeover, with some users being assisted by the Household Assistance Scheme or the Satellite Subsidy Scheme.

While the free-to-air counterparts have delivered many new digital channels since 2010, the subscription TV companies have also added new channels so as to maintain and increase subscription levels while also growing revenues and profits. Unfortunately the subscribers have been leaving, churn increasing and now into 2011-12 revenues now also decreasing and expected to continue this way in the short term.

One positive highlight of subscription TV revenues is that the ARPU of both AUSTAR and FOXTEL are still increasing as the remaining subscribers have a higher tier package takeup. As yet, we still have to really see how the subscription TV operators can increase subscribers as the analogue switchover to digital broadcasting moves across the Australian continent.

There are more than 200 channels currently available to subscribers of the three major local subscription television groups with a selection of time-shifting, HD and digital channels available. The local pay TV providers are FOXTEL and Optus TV (each of which operates in the metropolitan markets), and AUSTAR (which operates in the regional markets). Between them in early 2012, these three operators had around $3 billion in annual revenue.

One of the killer internet applications that is being produced is by the users themselves, with YouTube being the second-most-visited site in Australia in early 2012. IPTV may get the revival it needs in 2012 with more widespread ADSL2+ broadband available, the prospect of new business models on the NBN and a new look at Triple Play models is putting IPTV back on the agenda again – if the pricing is right.

The most popular video downloads and streams are full-length episodes of TV shows, amateur video clips such as YouTube, music videos and feature-length films. BuddeComm estimates that video downloading and streaming of video has grown to well over 50% of all regular online video users who intend to increase their use of streaming video.

The increased take-up of smart TVs has seen sales increase by more than 20% in the last year as smart TVs are now becoming a must have item for the consumer. Some of the smart TV manufactures that have included internet connectivity with inbuilt EPGs include LG, Panasonic, Samsung and Sony. When these are connected to a high-speed broadband these smart connected TVs will become the home media centres of the next 5 or so years.

In the digital economy we are seeing spending on online advertising expenditure in Australia continuing to reach new highs. The amount spent in the online advertisements segment in Australia is continuing to grow as does the expenditure by the businesses and consumers in this marketplace. Driving the spending is often mobile devices where purchases can be made on a whim or as the need arises and by comparison shopping using the mobile device.

By end-2011 online advertising had increased overall by around 17% year-on-year in 2011. The increase in online advertising may be in anticipation of an increased economic environment coming into 2012 as Australian businesses continue to increase the amount of online sales.

The increased use of video advertising and also video viewing continues to grow as the increase in broadband availability has seen advertisers continue to experiment with new formats. Into 2012 we will continue to see an increased use of targeted advertising delivered over the internet, as millions of users watch millions of online videos monthly. Overall it is estimated that video advertising is still less than 2% of overall online advertising spending.

The commercial and national broadcasters (Australian Broadcasting Corporation and Special Broadcasting Service) formally commenced digital radio services in the five mainland state capitals in Adelaide, Brisbane, Melbourne, Perth and Sydney in 2009. Trials of digital radio are still progressing in Canberra and Darwin in 2012 as an extension of the trial was granted in 2011.

It was also expected that community broadcasters would commence services in these markets but funding and uncertainty about standards has temporarily put a stop to this. While Australian commercial radio broadcasters have agreed to adopt the new DAB+ standard for the implementation of digital radio, the excessive infrastructure costs may slow regional adoption. Other issues include the limited coverage area as opposed to existing technologies.

While digital radio has the potential to deliver a range of new and innovative services to listeners through the more efficient use of radiocommunications spectrum, the introduction is premised on digital radio being used as a supplement to existing radio services rather than a replacement technology. As such, digital radio will be introduced in stages, and operate alongside existing analogue radio services.

Key performance indicators of the broadcasting, subscription TV and online markets – 2011

Category

2011

FTA TV advertising (billion)

$3.9

Subscription TV revenue (million)

$3.0

Online advertising revenue (billion)

$2.7

Pay TV subscribers (million)

2.4

Digital radio listeners (million)

1.0

Digital TV penetration

>80%

Households with a PVR

46%

Homes with one TV set only

38%

(Source: BuddeComm, based on various industry figures and estimates)

Market highlights:

  • Sales of smart TVs increased by around 20% across Australia in 2011.
  • YouTube is the second most visited site in Australia in 2012.
  • Estimated ARPU statistics and Pay TV revenue forecasts to year end 2012.
  • By early 2012 over 80% of households had converted to digital TV.
  • By end-2013 all analogue transmissions are to cease.
  • Expenditure on online advertisements in Australia grew 17% year-on-year in 2011.
  • Mobile advertising was estimated to have increased by more than 300% year-on-year in 2011.

Data in this report is the latest available at the time of preparation and may not include the current

Table of Contents

  • 1. The Market in 2012
    • 1.1 Changes to the industry
    • 1.2 Digital TV
    • 1.3 Digital dividend
    • 1.4 Viewer Access Satellite Television
    • 1.5 Additional infrastructure
    • 1.6 Anti-siphoning scheme
    • 1.7 Local content
    • 1.8 Digital Radio
    • 1.9 National Broadband Network
    • 1.10 Convergence review
    • 1.11 Disability broadcasting
    • 1.12 New developments – smart connected TVs to drive broadband consumption
  • 2. Free-to-Air TV
    • 2.1 Market Overview and Statistics
      • 2.1.1 Market update
      • 2.1.2 Trends and analysis
      • 2.1.3 Market statistics and revenue
      • 2.1.4 Drama spending and production
    • 2.2 Broadcasters
      • 2.2.1 National broadcasters
      • 2.2.2 Regional broadcasting
      • 2.2.3 Community television broadcasting services
      • 2.2.4 Indigenous broadcasters
  • 3. Pay TV
    • 3.1 Subscribers – Overview and Analysis
      • 3.1.1 Market statistics
      • 3.1.2 Industry and market analysis
      • 3.1.3 Major players – overview and major developments
      • 3.1.4 Forecasts – Pay TV penetration – 2010 - 2015
    • 3.2 Industry Revenues and Analysis
      • 3.2.1 Market analysis
      • 3.2.2 Revenue statistics
      • 3.2.3 ARPU and churn Statistics
      • 3.2.4 Infrastructure statistics
    • 3.3 Foxtel
      • 3.3.1 Company information
      • 3.3.2 Operational results
      • 3.3.3 Financial results
      • 3.3.4 Products and services
      • 3.3.5 Operating centres
      • 3.3.6 Company history
    • 3.4 Austar United Communications Ltd
      • 3.4.1 Company information
      • 3.4.2 Company analyses
      • 3.4.3 Operating results
      • 3.4.4 Financial results
      • 3.4.5 Network
      • 3.4.6 Network rollout and alliances
      • 3.4.7 Subsidiaries – XYZnetworks
      • 3.4.8 Services
      • 3.4.9 Company history
  • 4. Digital TV
    • 4.1 Smart TV
      • 4.1.1 The Smart or Connected TV
    • 4.2 Market Overview and Statistics
      • 4.2.1 Digital TV broadcasters
      • 4.2.2 Market trends, developments and analysis
      • 4.2.3 Statistics
      • 4.2.4 Market surveys
    • 4.3 Digital Video Recorders
      • 4.3.1 Introduction
      • 4.3.2 Subscriber statistics
      • 4.3.3 Market analysis
      • 4.3.4 Key players and products
    • 4.4 Interactive TV and EPGs
      • 4.4.1 Interactive TV (iTV)
      • 4.4.2 Electronic Program Guides (EPGs)
  • 5. Digital Media
    • 5.1 Overview and Analysis
      • 5.1.1 The anomaly of the mass media
      • 5.1.2 The future of mass media news
      • 5.1.3 Key trends and developments
      • 5.1.4 Industry analysis
      • 5.1.5 News Corp and subsidiaries
      • 5.1.6 Fairfax Digital
    • 5.2 Digital Economy – Advertising, Statistics, Revenues, Forecasts
      • 5.2.1 Digital economy – business internet income
      • 5.2.2 The online advertising market
      • 5.2.3 Mobile internet advertising
      • 5.2.4 Generation Y is driving the online media push
      • 5.2.5 Revenue statistics
    • 5.3 IPTV Market Overview
      • 5.3.1 Introduction
      • 5.3.2 The first ten years
      • 5.3.3 The next decade
      • 5.3.4 Market surveys
      • 5.3.5 Optus copyright win – analysis
      • 5.3.6 Regulations and standards
    • 5.4 IPTV Major Players
      • 5.4.1 Introduction
      • 5.4.2 Telstra BigPond Media
      • 5.4.3 Optus TV
      • 5.4.4 Australian Broadcasting Corporation (ABC)
      • 5.4.5 BBC iPlayer in Australia
      • 5.4.6 FetchTV
      • 5.4.7 FOXTEL
      • 5.4.8 Hulu
      • 5.4.9 iiNet
      • 5.4.10 Internode
      • 5.4.11 Netbay
      • 5.4.12 Netflix heading Down Under?
      • 5.4.13 ninemsn
      • 5.4.14 Quickflix
      • 5.4.15 Special Broadcasting Service (SBS)
      • 5.4.16 Ten Network
      • 5.4.17 TransACT
      • 5.4.18 VOD Pty Ltd
      • 5.4.19 Yahoo!7TV
      • 5.4.20 IPTV for remote mining sites
  • 6. Radio
    • 6.1 Market Overview and Statistics
      • 6.1.1 Market overview
      • 6.1.2 Major players
      • 6.1.3 Digital media developments
      • 6.1.4 Brief history of radio broadcasting
    • 6.2 Digital Radio Market
      • 6.2.1 Market overview
      • 6.2.2 Market analysis
  • 7. Glossary of Abbreviations
  • Table 1 – Television set penetration by number of sets – 2010 - 2011
  • Table 2 – Advertising revenue share for commercial networks – 2009 - 2011
  • Table 3 – Percentage shares of capital city TV ad market – 1998 - 2011
  • Table 4 – Advertising spending by media sector – 2009 - 2011
  • Table 5 – Australian advertising spend in Pay TV and FTA sectors – 2010; 2014
  • Table 6 – Australian advertising spend by industry – 2010; 2014
  • Table 7 – Australian advertising production – 2007 - 2010
  • Table 8 – Australian content between 0600-2400 – 2007 - 2010
  • Table 9 – Pay TV subscribers by major operator – 2000 - 2013
  • Table 10 – Pay TV subscribers – annual change by major operator – 1997 - 2013
  • Table 11 – Pay TV household penetration rates – 1997 - 2012
  • Table 12 – Forecast pay TV household penetration – lower market growth scenario – 2012 - 2015
  • Table 13 – Forecast pay TV household penetration – higher market growth scenario – 2012 - 2015
  • Table 14 – Pay TV revenue by major operator – 1997 - 2012
  • Table 15 – Percentage change of pay TV revenue by major operator – 1998 - 2012
  • Table 16 – Subscription TV advertising revenue and annual change – 2000 - 2013
  • Table 17 – Net losses pay TV industry – 1996 - 2010
  • Table 18 – Pay TV industry annual churn rates – 1996 - 2012
  • Table 19 – Pay TV rollout statistics (homes passed) (historic) – 1996 - 1998; 2002 - 2008
  • Table 20 – Total FOXTEL and wholesale subscribers – 2002 - 2012
  • Table 21 – FOXTEL and wholesale subscribers by annual change – 2003 - 2012
  • Table 22 – Subscriber annual churn rate – 2002 - 2012
  • Table 23 – FOXTEL subscribers by type – 2008 - 2012
  • Table 24 – FOXTEL key financial statistics– H1 2009 – H1 2012
  • Table 25 – FOXTEL key financial statistics– 2008 - 2012
  • Table 26 – FOXTEL yearly and monthly ARPU – 2003 - 2012
  • Table 27 –FOXTEL on-demand pricing – 2012
  • Table 28 – AUSTAR monthly subscriber churn – 2002; 2005 - 2011
  • Table 29 – AUSTAR subscribers and annual change – 2000 - 2012
  • Table 30 – AUSTAR MyStar subscribers versus MyStarHD subscribers – 2008 - 2012
  • Table 31 – AUSTAR mobile and data subscribers and annual change (historic) – 2000 - 2011
  • Table 32 – AUSTAR revenue and annual change – 2000 - 2012
  • Table 33 – AUSTAR ARPU by quarter – 2004 - 2011
  • Table 34 – AUSTAR key financial indicators – 2008 - 2011
  • Table 35 – Household conversion to digital TV – 2009 - 2011
  • Table 36 – Percentage of digital TV households by region – 2009 - 2011
  • Table 37 – Total plasma, LCD digital TV sales and annual change – 2003 - 2011
  • Table 38 – Media centre penetration forecasts – Australia – 2005; 2007; 2010; 2015
  • Table 39 – Estimated DVR subscribers – total market – pay TV and FTA TV – 2006 - 2012
  • Table 40 – Estimated DVR subscribers – by major provider – 2006 - 2012
  • Table 41 – Most popular formats for receiving news in the USA – 2010
  • Table 42 – Fairfax Digital financial overview – 2008 - 2011
  • Table 43 – Business internet income and annual change – 2007 - 2012
  • Table 44 – Estimated mobile device advertising in Australia – 2008 - 2011; 2015
  • Table 45 – Market shares of key online advertising markets – 2008 - 2012
  • Table 46 – Online advertising expenditure and forecasts – 2000 - 2015
  • Table 47 – Estimated video streams by selected providers – 2008 - 2011
  • Table 48 – Radio advertising revenue by metropolitan city – 2009 - 2012
  • Table 49 – Estimated metropolitan radio listeners and usage – 2008 - 2011
  • Table 50 – Number of commercial and government radio stations – 2012
  • Table 51 – Number of commercial radio services by city – 2012
  • Table 52 – Southern Cross Austereo financial key performance indicators – 2010 - 2011
  • Table 53 – Estimated size of digital radio audience – 2009 - 2012
  • Table 54 – Estimated sales of digital radios – 2010 - 2012
  • Chart 1 – Overview of percentage shares of capital city TV ad market – 1998 - 2011
  • Chart 2 – Overview of advertising spending by media sector – 2007; 2009 - 2011
  • Chart 3 – Overview of Australian advertising spend by industry – 2010; 2014
  • Chart 4 – Overview of Australian advertising production – 2007 - 2010
  • Chart 5 – Overview of Australian content measurement between 0600-2400 – 2007 - 2010
  • Chart 6 – Overview of pay TV subscribers by major operator – 2000 - 2013
  • Chart 7 – Overview of pay TV household penetration rate – 1997 - 2012
  • Chart 8 – Overview of forecast of pay TV household penetration – lower market growth scenario – 2012 - 2015
  • Chart 9 – Overview of forecast of pay TV household penetration – higher market growth scenario – 2012 - 2015
  • Chart 10 – Overview of pay TV revenue by major operator – 1997 - 2012
  • Chart 11 – Overview of subscription TV advertising revenue – 2000 - 2013
  • Chart 12 – Overview of STV ad revenue total revenue versus subscription revenue – 2000 - 2013
  • Chart 13 – Overview of ARPU levels – AUSTAR, FOXTEL – 1999 - 2002; 2003 - 2012
  • Chart 14 – Overview of FOXTEL revenue and annual change – 2003 - 2012
  • Chart 15 – Overview of FOXTEL iQ DVR subscribers and annual change – 2006 - 2012
  • Chart 16 – Overview of FOXTEL HD package subscribers and annual change – 2008 -2012
  • Chart 17 – Overview of AUSTAR pay TV subscribers and annual change – 1996 - 2012
  • Chart 18 – Overview of AUSTAR subscribers – commercial versus residential and annual change – 2005 - 2012
  • Chart 19 – Overview of AUSTAR PDR MyStar versus MyStar HD subscribers – 2008 - 2012
  • Chart 20 – Overview of AUSTAR – the decrease in mobile and data customers (historic) – 2001 - 2011
  • Chart 21 – Overview of AUSTAR revenue and annual change – 1996 - 2011
  • Chart 22 – Overview of AUSTAR ARPU and churn by quarter – 2004 - 2011
  • Chart 23 – Overview of AUSTAR key financial indicators – 2007 - 2011
  • Chart 24 – Overview of AUSTAR long term share trending– 2003 - 2012
  • Chart 25 – Overview of AUSTAR share price trending – 2011 - 2012
  • Chart 26 – Overview of overall household conversion to digital TV – 2009 - 2011
  • Chart 27 – Overview of plasma versus LCD digital TV sales and annual change – 2003 - 2011
  • Chart 28 – Overview of estimated DVR subscribers by major provider – 2006 - 2012
  • Chart 29 – Overview of market share of DVD subscribers by major operator – 2010 - 2011
  • Chart 30 – Fairfax Digital revenue broadcasting versus online – 2008 - 2011
  • Chart 31 – Overview of business internet income and annual change – 2007 - 2012
  • Chart 32 – Overview of mobile online advertising revenue – 2008 - 2011; 2015
  • Chart 33 – Overview of online advertising expenditure and forecasts – 2001 - 2015
  • Chart 34 – Amount of online content access by Australians – 2010
  • Chart 35 – Audience market share of Australian video websites – 2010
  • Chart 36 – Overview of radio advertising revenue by metropolitan city – 2007 - 2012
  • Chart 37 – Overview of estimated metropolitan radio listeners – 2007 - 2012
  • Chart 38 – Overview of Southern Cross Austereo financial key performance indicators – 2010 - 2011
  • Chart 39 – Overview of digital radio sales versus listeners – 2009 - 2012
  • Exhibit 1 – Nine Network coverage
  • Exhibit 2 – Brief background history on the Southern Cross Broadcasting company
  • Exhibit 3 – Digital community television licences – 2010 - 2011
  • Exhibit 4 – Background information on community television licences
  • Exhibit 5 – Overview of new media activities from pay TV operators
  • Exhibit 6 – Pay TV rollouts by state
  • Exhibit 7 – FOXTEL at a glance – 2012
  • Exhibit 8 – Austar United Communications (AUSTAR) at a glance – 2012
  • Exhibit 9 – Overview of analogue switch off to digital by regional and metropolitan area
  • Exhibit 10 – TiVo background information
  • Exhibit 11 – Smart TV and Connected TV definition
  • Exhibit 12 – Interactive Program Guides versus Electronic Program Guides
  • Exhibit 13 – Free TV EPG background information
  • Exhibit 14 – Overview of the ICE EPG digital copyright court battle
  • Exhibit 15 - Case studies similar to the Optus case
  • Exhibit 16 – Estimated number of radios and listening habits
  • Exhibit 17 – DMG’s full list of radio stations:
  • Exhibit 18 – Grant Broadcasters radio stations – 2012
  • Exhibit 19 – Austereo national networks
  • Exhibit 20 – Timeline of music on the Internet – 1984 - 2012

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Technologies

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Regulations & Government Policies
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Number of pages 192

Status Archived

Last updated 7 Mar 2012
Update History

Analyst: Stephen McNamara

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