A study from Northern Sky research (NSR) confirms a definite downward trend in video-related revenues for the world’s main satellite operators.
NRS’s Satellite Industry’s Financial Analysis, 10th Edition report gives the good news first, saying: “The satcom industry continues to witness mixed financial results, with non-video revenues growing across multiple verticals.”
But then comes the bad. NSR says: “Video (including DTH and Video Distribution) revenue continued to slow massively, contracting by 15.1 per cent cumulatively in 2019 YoY for the top six operators analysed. European hotspots remain under stress as SES and Eutelsat continue to face challenges in declining hotspot prices. 2019 witnessed a further decline in cumulative video revenue figures as Hughes sold its video business, the ESS division, to DISH Network internally under the same parent company to consolidate prices as pay-TV headwinds continue in the US.”
“Satellite operators are experimenting with price, de-commoditising offerings, aggressively pursuing new markets in Africa, Asia, and Latin America, and acquiring critical hotspot positions to reverse declining revenue trends for the video segment. However, video headwinds arising from the shift in advertising revenues to social media and Internet platforms have not changed to warrant a reversal of trend. The situation is exacerbated by pressure from OTT providers such as Netflix and traditional broadcasters now giving equal or more importance to OTT revenues, following a shift in advertising,” adds NSR.
The researchers say there are some gentle signs of growth as broadcasters add HD and UHD services.
“As every operator strategises to move closer to consumers, NSR expects service providers bargaining power to dwindle, thus providing some buffer for wholesale prices to stabilise. Operators will be forced to optimise offerings and integrate added value such as distribution efficiency, cloud etc., rather than compete on price. Channel and transponder upgrades, enabling delivery of content over HD and UHD, will drive the next wave of growth for video. However, video will most likely stabilise, posing a slight improvement on price and revenue uptick,” says the report.
NSR expects high growth to continue in backhaul, trunking, Gov/Mil and VSAT verticals as Non-GEO and HTS systems unlock more value for telecom and government customers. Mobility is expected to rebound post Covid-19, with maritime recovering in late 2021/2022 and aero fully bouncing back in 2022. Advanced-television