8 FEB 2023

Leading Media & Entertainment companies grew 8.2% in Italy in 2022

Netflix's performance (+8.1%) is in line with the average but strongly slowdown compared to growth during the pandemic.

8 FEB 2023
Imagen Los ingresos de la TV paga bajarán en promedio un 11% para 2023

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In the first nine months of 2022, the revenues of the main international Media & Entertainment companies grew by 8.2% in Italy compared to the same period of 2021. According to Mediobanca study, Netflix's performance (+8.1%) is in line with the average but strongly slowdown compared to growth during the pandemic (+24.0% var. 2020/19 and +18.8% var. 2021/20). The expansion of streaming services continued, with revenues up by 14.8% and accounting for around 17% of turnover total. Revenues from the production and distribution of content also grew, albeit with more contained dynamics (+4.1%, equal to 18.4% of revenues), as well as advertising revenues (+2.0%, equal to 8%). Traditional Pay TV subscriptions, on the other hand, decreased by 4.9% (19.7% of the total), confirming an increasingly on-demand and fragmented method of accessing media content.

For the main international companies, users of streaming services are growing (+18.6% between September 2022 and the same month in 2021). Walt Disney is the 1st player in terms of number of subscribers on a global scale thanks to its three platforms (Disney+, Hulu and ESPN+) which together reach almost 236 million, equal to 25.6% of the total share of the S-Vod market (subscription video-on-demand). At the individual platform level, Netflix confirmed its first position with 223 million subscribers (equal to 24.3% of the market), ahead of Prime Video (22.8%). The newly formed Warner Bros. Discovery follows at a distance (10.3%, almost 95 million subscribers) and Paramount Global (7.2%, over 66 million).

In 2021, the Italian radio and television sector recovered part of the ground lost due to the pandemic, reaching a total turnover of €8.5 billion (+4.6% on 2020), a level still lower than the 8.7 billion of the 2019 (-2.6%). The recovery was not homogeneous across the various sectors: radio was in the greatest shape with growth of 11.2% (€0.6 bn in 2021), followed by free-to-air TV (+9.7%, at €4.8 bn), while the decline in pay TV continued (-3.6% to €3.1 bn). The latter is affected by diametrically opposite trends, with traditional Pay TV downsizing (-14.9%) and streaming growing by double digits (+32.0%), so as to allow the sector to increase its specific weight up to 32.3% of total pay-TV revenues (more than double that of 2019). Online platforms continue to expand to account for 11% of the industry in 2021.

The Italian market remains concentrated, with the top three television operators (Rai, Sky and Mediaset) developing over 80% of the overall turnover. In terms of turnover, Rai is in first position in 2021 (€2.7 bn, +6.7% on 2020), followed by Sky (€2.5 bn, -10.4% on 2020) and Mediaset ( €2.0 bn, +11.7%). The exponential growth of online platforms continues, thanks above all to Netflix which can already count on almost 5 million subscribers (+50% compared to 2019). These numbers allow the operator S-Vod to develop an estimated turnover of around €550 million in our country (+35% on 2020 and +70% compared to 2019), with a projection towards €600 million in 2022.

For the whole of 2022, a 4% drop in the total revenues of the main Italian operators in the sector is estimated, by virtue of the further contraction of traditional Pay TV and the slowdown in advertising sales (which should close the year with -5%), again offset by the growth in streaming. In this context, however, it is necessary for Italy to continue to fill the existing gap with the main European countries in terms of diffusion of VHCN networks (Very High Capacity Networks).

With the S-Vod segment increasingly competitive and close to saturation, also considering the cyclical decrease in the purchasing power of the average consumer, viewers are likely to start diversifying their media sources in search of free content. It is therefore reasonable to expect a slowdown in paid subscriptions in the near future, with the main S-Vod operators who could react by increasing the importance of mixed offers between S-Vod and A-Vod (Advertising Video on Demand) services, or setting a crackdown on account sharing practices.