TV and video consumption

Playing field

OTT/streaming remains the biggest mover in TV and video consumption. Many households have been willing to add a paid OTT subscription to their triple- or quad-play telco subscription.

Growth opportunities in the largely saturated pay-TV market are limited. Ziggo retains a comfortable lead in the pay-TV space, accounting for more than half of the market. Ziggo and KPN combined account for nearly 85% of pay-TV subscriptions. The remainder is concentrated in three groups, each accounting for about 4 to 5%: M7 subsidiaries Canal Digitaal and Online.nl; Delta/Caiw, owned by Swedish private equity group EQT; and T-Mobile/Tele2. The latter have planned a merger in the Dutch market, which should become effective once the EU has approved the deal.

With most major pay-TV operators having announced price rises, the medium term will see reasonable revenue increases, and not heavily impacted by cord-cutting. We expect this increase to taper off from 2021, with a saturated market leaving little room for organic growth and with consumers becoming more critical about how they spend their media and connectivity budget.

What’s new?

Bundled content has become a fixture of the Dutch TV and video market, with KPN offering Spotify and Fox Sports in its premium bundles and Netflix via TV. Ziggo, meanwhile, has a variety of exclusive sports rights on Ziggo Sport and also offers Film1 and FOX Sports.

Netflix took an estimated 65% of the Dutch OTT video subscription market in 2017, driving the 20% rise in OTT/streaming revenue. The introduction of OTT in the Dutch market has been positive from a penetration point of view, but there is more to operating a successful OTT platform then merely launching it. Scale is key. This was illustrated by Knippr, an OTT service launched in 2016 by T-Mobile, which was discontinued as of June 2018. Tisha van Lammern of T-Mobile described Knippr as “addressing a target group that is too small”, stating that a more traditional or bundled OTT service was more likely to be effective as a future strategy.

TV and video consumption market (€ millions)
Netherlands  Historical data Forecast data   CAGR %
  2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 18-22
Pay-TV 1,102 1,108 1,127 1,147 1,181 1,216 1,252 1,279 1,291 1,297 1.9%
y-o-y growth   0.5% 1.7% 1.8% 3.0% 3.0% 2.9% 2.2% 0.9% 0.5%  
OTT/streaming 53 84 158 242 290 323 342 362 376 388 6.0%
y-o-y growth   57.4% 89.3% 52.7% 19.8% 11.4% 5.9% 5.9% 4.0% 3.0%  
Physical home video 176 136 105 83 72 64 58 53 48 44 -9.2%
y-o-y growth   -23.0% -22.5% -21.4% -13.0% -11.3% -9.2% -8.9% -8.8% -7.5%  
Total 1,332 1,328 1,390 1,472 1,543 1,603 1,652 1,694 1,715 1,729 2.3%
y-o-y growth   -0.3% 4.7% 5.9% 4.8% 3.9% 3.0% 2.6% 1.3% 0.8%  

Outlook

The Netherlands is set to become a converged three-player fixed mobile and TV market, if T-Mobile Netherlands’ acquisition of Tele2, announced in December 2017, is approved. The European Commission opened an investigation into the merger in June 2018. As in other EU countries where the EC prohibited recent mergers (Three-O2 in the UK and Telenor-Telia in Denmark), it may decide that "four’s good, three’s bad" in the Dutch market too.

Under the merger agreement, T-Mobile will own 75% and Tele2 25% of the combined company, which will offer consumers an alternative to the quad-play duopoly of KPN and VodafoneZiggo.

The OTT market is set to become ever more crowded. Following success in the US, HBO’s streaming service has launched in more than a dozen European markets, and further expansion is likely. Meanwhile, Disney says its two planned OTT services, for sport and entertainment, will initially launch in the US but could be considered the start of a global move. Furthermore, Disney and others invested in a new start-up, which will focus on 15-minute mobile video content.

Key questions to be addressed are i) which strategies can Dutch telecom operators apply to ensure that Dutch households are willing to pay for pay -TV in the future, and ii) how local and international OTT providers can deliver the right user experience. One growing concern is the unwillingness of households to acquire multiple subscriptions to gain access to their favourite video content.

Contact us

Steven Pattheeuws

Partner Strategy&, PwC Netherlands

Tel: +31 (0)88 792 29 36

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