DTH Markets in 2012: The Year of Convergence?

by NSR

Cambridge, Mass., January 6, 2012-As NSR stated in its Global Direct-to-Home Markets, 4th Edition report, OTT services are coming to DTH markets around the world. This year, the Super Bowl (the largest TV event in the United States) will be available over the Internet in near HD resolution. Netflix alternatives continue to boost content libraries and expand into new markets. And, rumors of an Apple-powered TV service continue to point towards a 2012 launch. All signs show 2012 will be the start of a significant convergence between traditional and OTT services, which is a trend that DTH platforms must address going forward.

In 2010 and 2011 DTH operators in developing markets introduced value-driven offerings that provided tremendous growth for platforms particularly across Latin America and Eastern Europe. Elsewhere, DTH operators continued to deploy HD/DVR hardware and branded non-linear offerings, enabling synergies between DTH and OTT services. However, as mentioned in NSR’s DTH4 report, the near-term gains in subscription revenues in emerging markets could represent a significant risk if DTH platforms cannot retain these new subscribers.

To solve this issue (and diversify revenues), some DTH operators have taken steps to deploy advanced wireless Internet services. Already, DIRECTV’s Sky Brazil announced a new 4G wireless Internet offering for 2012 in selected markets, the first steps towards advanced media distribution service. DISH Network in the U.S. continues to remain silent on plans for spectrum it acquired in 2011, but will likely include a media-distribution component. These new distribution networks will help enable a new synergy between DTH and OTT services.

Bundled business models such as Sky Brazil’s will help attract and retain high ARPU generating subscribers, and provide an alternative revenue stream in a period of tough economic conditions and slowing subscriber growth rates. Although ARPU growth will be driven mostly by HD and DVR deployments on a global basis, according to NSR’s DTH4 Study, these new services will likely enable a converged media experience and will be a key factor in attracting and retaining customers for DTH platforms such as Sky Brazil.

Bottom Line
Last year many DTH platforms introduced traditional linear DTH offerings into new market segments across the globe, and DTH subscribers in 2012 will have access to a wider range of non-linear offerings. Bundled offerings such as Sky Brazil’s will also help blur the line between linear and non-linear offerings and complement revenue streams for DTH platforms. Given these growing trends, it is now clear that convergence is front-and-center for DTH platforms worldwide.