2017 Outlook for Europe

European Consumers Watch More and Expect More – But Are Frugal When They Have to Pay for Content and Connectivity
By Joost Hageman, Senior Principal Regional Marketing Manager

Like much of the developed world, consumers in Europe, the Middle East and North Africa are looking for better access to networks from wherever they happen to be, and expect blistering speeds once they establish a connection. With this basic fact of 21st century human behavior in mind, the many countries in the European region offer varied challenges to media companies and network operators as they look forward to 2017.

The region includes enormous countries like Russia with vast distances between cities; the well-developed Western European market of small countries with dense populations; and the extremely competitive and developing Central and East European nations. In the Arab-speaking countries of North Africa, wireline broadband is far less ubiquitous than in Europe or Russia, and free-to-air, ad-sponsored television is the norm. In addition, the Middle East offers highly sophisticated as well as extremely challenging markets.

The highly developed Western European market is arguably more competitive than the United States. On average, consumers have the choice between three or more full-service providers per country, plus virtual network operators that specialize in discounted bundled offers. This translates into substantially lower price-points for TV, Internet and mobile subscription services than in the United States. Europeans don’t cut or shave cords — they dump their provider and will shop elsewhere. Network operators are further challenged by over-the-top (OTT) delivered content from Amazon, Netflix, and similar providers.

From a consumer perspective, the options for connectivity are as outstanding as the quality of the services they can get. Poor service or price-hikes are punished with churn rates that can surpass 10-12% per reporting period. One cable operator in The Netherlands steadily lost about 50% of its market share for TV services to a telephone company that proved far better at bundling its portfolio and marketing triple and quadruple play with unified billing and highly functional TV-on-demand. The wide consumer choice in most European countries often extends to how they watch media, where they choose to watch it, and on what type of device, regardless of the network consumers are connected to.

Within the media vertical, we are seeing an ongoing and fairly large shift from linear TV consumption to watching TV on tablets and smartphones. Over-the-top TV has grown in importance in the last couple of years and this growth shows a generational shift in consumption patterns. Behavioral studies by the UK regulator Ofcom have found that younger people prefer programs on their smartphones to watching them on large televisions. Some media analysts are even predicting a structural decline in traditional TV ownership as users shift to watching TV on tablets and smartphones. Operators and players in this market have reacted in various ways to this, with offers of all HD for the most popular in their channel packages, network PVR services, and triple and quadruple play packages. People watch more and expect more — and they demand the best deal when it comes to paying for content and connectivity.

For mobile broadband, one would think that as developed and densely populated as Europe is, connectivity would not be a problem. Consumers are surprised and sometimes even shocked to have a single bar on their mobile phone while driving through the German or French countryside. They pay for and expect top notch 3G, 4G, or LTE advanced connectivity. So mobile network operators are required to find the best possible ways to manage network demand and provide “anywhere” connectivity without over-dimensioning and investing too much in places where the business case for doing so with terrestrial means like fiber or microwave are hard to justify. Amongst the biggest challenges mobile operators face are large seasonal shifts in network traffic and in delivering mobile data to the edges of their networks.

Recognizing the challenges faced by MNO customers, satellite operators are adapting wireless network solutions to better support the changing consumer patterns and the ongoing convergence of media and broadband services. The market is shifting more rapidly now than it has since commercial satellite services were first offered to customers in the mid-1960s. Media companies are also increasingly price sensitive at a time when they are being forced to reinvent themselves. Satellite service providers will play an increasing role in complementing terrestrial networks, using satellites’ ability to scale extremely well in point-to-multipoint distribution of digital files, not just for media but for anything digital. This is the scenario in which the EpicNG-class satellites show their value: they provide a superior throughput for any data service, better economics as well as easier access to a globalized network that reaches everywhere.

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