Market Insight

Pay DTT arrives in Austria with SimpliTV

April 14, 2013

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Pay DTT officially launched in Austria this week with the introduction of SimpliTV on Monday 15 April. The service is operated by Simpli Services, a subsidiary of Austrian broadcaster ORS, which already manages Austria's free DTT service. The launch of SimpliTV also marks the introduction of DVB-T2 technology in Austria, which allows for additional channels on DTT multiplexes, including HD content.

SimpliTV expands the free-to-air (FTA) DTT channel offering in Austria from eight to 19 if regional channels are included, and with free registration to SimpliTV includes HD versions of public channels ORF eins and ORF 2, and commercial channel Servus TV. In addition to the FTA channels, the consumer can choose to purchase a bouquet of 27 channels for a subscription fee of €10 per month or €110 per year. Of these pay channels, six are in HD. In order to receive the expanded number of terrestrial channels through SimpliTV, consumers must have a DVB-T2 set-top box or CI+ module, a TV suitable to receive DVB-T2 signals, and a DVB-T2 antenna. SimpliTV is at present only available in urban areas in Austria. The standard DVB-T terrestrial service will continue to be offered alongside SimpliTV, increasing the total DTT multiplexes in Austria to six. Free DTT launched in Austria in late 2006.

SimpliTV enters a fairly fragmented pay TV landscape, largely due to geographical reasons preventing one single company from assuming a dominant position. Nevertheless, SimpliTV will still face competition from a cable market led by Liberty Global's UPC, which had 535,300 subscribers at Q4 2012 and recently announced the dropping of encryption on 49 basic level digital channels. Aside from cable, pay TV in Austria comprises a steadily increasing subscriber base for IPTV from Telekom Austria's A1 service, and the presence of Sky Deutschland and the M7 Group's AustriaSat in the satellite market. Altogether, IHS Screen Digest estimates that pay TV represents around 52 per cent of TV households in Austria.  This suggests that there is a significant segment of the TV market in Austria that SimpliTV may be able to take advantage of.  However, since SimpliTV is not yet available in the rural areas out of the footprints of pay TV operators, at present there may be somewhat limited room for expansion of DTT households. If coverage of the new multiplexes is extended to include these areas, this may become more of a reality.

One opportunity for SimpliTV may lie in analogue cable households, which represented approximately 20 per cent of Austrian TV households at the end of 2012, mostly from small, regional cable operators. With pressure for analogue cable households to switch to digital likely to mount following 2011's analogue terrestrial switch-off, SimpliTV's relatively inexpensive channel offering with HD content may signify an attractive alternative. UPC's dropping of encryption of basic digital channels may have a slight dampening effect on this, but this would depend on whether analogue subscribers have technology supporting digital cable. Furthermore, removing UPC, analogue cable still accounts for around 15 per cent of TV households in Austria.

Simpli TV could also be appealing to Austria's many free satellite households and to households considering a budget pay TV service on secondary TV sets. Another small catchment area may come from free DTT households with 'old' DVB-T technology. At present, households using ORS's free service on primary or secondary set represent around 12 per cent of total TV households - a figure which has stayed fairly constant since 2008. The likeliness of SimpliTV increasing DTT penetration in Austria will depend on the ease of transmitting DVB-T2 signals, the speed and volume at which DVB-T2 equipment can be distributed, and the price of such technology.

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