A white paper from Intelsat, in partnership with Caretta Research, provides new information about content distribution in the CEE region. The report highlights that linear TV channels are still an essential component of the media distribution mix, generating more revenue for most content owners than ad-funded streaming, a key pillar of content brands alongside co-branded FAST channels and streaming services. Lower-cost cloud-based broadcast playout is making it easier and cheaper for channel owners to originate more channel brands and more localized versions of those channels targeting specific markets with advertising.
These market dynamics are seen mainly in Central and Eastern Europe, where expanding economies and a still-growing number of TV households create opportunities for channel owners to reach new audiences and tap additional revenues. As pay TV operators and telcos in CEE shift to a super-aggregation model, offering popular linear TV channels is a crucial point of differentiation as they compete with standalone streaming competitors and smart TV devices. Channel owners have multiple technology choices for delivering their channels to operators, with satellite maximizing reach across pay TV platforms, fiber enabling robust delivery of localized channel versions, and internet feeds enabling rapid coverage of hard-to-reach operators. Telcos and pay-TV operators have varying preferences for which delivery mechanism they prefer to use to receive channel feeds, with trade-offs between upfront cost, signal quality, operational complexity, security, and time-to-market.
Channel owners can maximize the number of TV households they reach by adopting a hybrid distribution strategy, using each distribution mode flexibly to respond to the needs of each market and every individual satellite DTH, cable, and IPTV operator. This is enabled most efficiently and effectively by working with a distribution service provider that can support satellite, fiber, and internet models and demonstrate experience working with pay TV affiliates in multiple markets.
In the face of an onslaught of streaming services, linear TV channels remain remarkably resilient and relevant to consumers. These channels and the advertising and carriage fees they generate continue to drive more revenue than streaming for most content owners. For example. Warner Bros. Discovery’s combined 2022 results revealed $23.2B of (mostly) advertising and carriage revenue from its TV networks business, compared with $9.7B for its direct-to-consumer streaming business with brands like Discovery+ and HBO Max. Moreover, while streaming remains loss-making, the TV networks business is highly profitable. Even where the viewing-hours consumption of linear channels is declining, the number of distinct channel brands remains remarkably stable, showing only small declines and growing in many European markets.
TV channels are the central pillar for many successful content brands, increasingly accompanied by co-branded FAST (free ad-supported streaming TV) channels and video-on-demand services. Supporting a mixed model of linear and streaming is a strategy for maximizing content revenue adopted by many content brands. At the same time, lower-cost broadcast infrastructure and playout, increasingly in the cloud, are making it more cost-effective than ever to originate channels. This enables channel owners to launch many more country- and language-specific versions of their services, tapping into additional advertising revenues. This is particularly true in the dynamic Central and Eastern European markets, where expanding economies drive new opportunities for localized channels.
Rise of the super-aggregators.
Telcos and pay-TV operators are rapidly transforming into super-aggregators. They combine linear channels with their own video-on-demand (VOD) and third-party streaming apps — delivered with a compelling user interface, personalization, search and discovery tools, and bundled subscriptions. This is typically delivered via Android TV Operator Tier on the main screen, supplemented by apps for smart TVs and mobile devices. For these operators, carrying linear channels provides a key differentiator. Offering a wide range of popular national and international channels sets operators apart from standalone streaming competitors and smart TV platforms.
MAXIMISING CHANNEL REACH
Within the CEE region, there are 30 million pay-TV households receiving satellite DTH, cable, and IPTV services across the seven key markets (Bulgaria, Czech Republic, Hungary, Moldova, Poland, Romania, and Slovakia). The region has some of the highest average pay TV penetration in the world, according to data from Ampere Analysis. These are fast-growing economies, with per-capita GDP seeing a compound annual growth rate of 7% and 9% in most markets from 2017 to 2022, compared with less than 2% in many mature Western European countries. Further, six million pay TV customers can be found in Albania, Bosnia, Croatia, Montenegro, North Macedonia, Serbia, and Slovenia.
This combination of TV household growth and economic expansion provides a vast potential market for channel owners to reach a growing consumer base. This is attractive to advertisers, and households are increasingly willing to pay for premium content through TV channels and video-on-demand. And while the number of pay TV households in Western Europe remains static, CEE markets have seen 1.9% compound annual growth in the number of homes receiving pay TV services between 2017 and 2022. By 2027, this is forecast by Ampere Analysis to grow a further 0.6%, reaching 30.8 million pay-TV households, with millions more receiving OTT TV services. Within the CEE region, multiple telecoms and pay TV operators offer services across satellite, cable, IPTV, and OTT. The market is a vibrant mix of independently-owned operators and those that are part of European and expanding regional groups, including A1 Group, Canal+, Deutsche Telekom, Orange, Telekom Srbija, United Group, and Vodafone.
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