Market Insight

SFR moves into DTH market with new pay TV bouquet

December 08, 2017  | Subscribers Only

Rob Moyser Rob Moyser Analyst, Television Media, Service Providers & Platforms
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French telecommunications operator and Altice subsidiary SFR has launched a new pay TV channel bouquet on the direct-to home (DTH) platform Fransat. The 'SFR Sat' bouquet consists of 18 premium channels and is split into four offers, SFR Sport, Altice Studio, SFRPlay and SFRPlay + Altice Studio, covering sports, cinema, entertainment and video on-demand (VoD).

  • SFR Sport consists of five channels including one channel dedicated to 4k content, and is available for a monthly subscription of €9.99.
  • The Altice Studio channel, also priced at €9.99 per month, features up to 400 films each month, including exclusive content financed by Altice.
  • SFR Play consists of several thematic channels, including Discovery Channel, SYFY, and E!, and is priced at €14.99 a month.
  • Customers can also combine SFR Play with Altice Studio for a discounted price of €19.99.
  • All four offers have no minimum contract period and have unlimited VoD access

Our analysis

Having struggled to significantly grow its subscriber base on cable and IPTV, Altice’s expansion into France's satellite market is another part of its wider growth strategy to increase its customer base outside its core pay TV unit, via offering premium low cost packages.

Through the assortment of premium and exclusive content on its new thematic packages, SFR will no doubt look to exploit the flurry of recent content acquisitions it has made over the past two years. SFR Sports for example includes key sports leagues such as the English Premier League, to which rights were won for €300 million in November 2015. And in May 2017, Altice gained rights to Champions League and Europa League football for €1.1 billion for three seasons from 2018. Altice Studio, meanwhile, features a large selection of exclusive and premium content acquired from several studios in 2017, including NBC Universal.

SFR's relatively low price point will be a key component in widening its customer base, with the €9.99 price tag attached to its sports bundle being lower than those of BeIN Sports and CanalSat, which offer services at €15 and €20 a month respectively. Furthermore, SFR’s adoption of a flexible no contract subscription provides added incentives to new subscribers when compared to the minimum term contracts often employed by pay TV operators. The cooperation with free-to-air service Fransat will also provide SFR with a wide addressable market, with close to two million homes using free satellite as a primary service as of Q2 2017 - around 7% of TV households in France.

Notwithstanding this, SFR has continued to see its customer base decline during this two year period of content acquisition, with IHS Markit estimating a loss of 618,000 subscribers from Q3 2015 to Q3 2017.  Meanwhile, other pay TV competitors such as Orange and Bouygues Telecom have in contrast seen subscriber bases increase over the same period. Following the release of its Q3 results, Altice also saw its share value plummet more than 40% primarily due to the heavy losses taken by SFR, suggesting a possible slowdown in its content acquisition going into 2018.

SFR's competitor Canal Plus, however, which was also facing subscriber decline, saw a turnaround in its subscriber base in Q3 2017. Over the quarter, its total individual subscriber base in France increased organically for the first time since 2014, from 7,984,000 to 8,008,000. Canal Plus has been following a similar growth strategy to SFR, with content acquisition, restructured packages and alliances with telecom operators such as Orange and Free to the fore. This suggests that SFR’s current strategy may still prove to be a successful strategy in the longer term.

Geography
France
Organization
Altice SFR
Research by Market
Media & Advertising
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