Cyfrowy Polsat is the largest pay TV provider in Poland and a leading satellite platform in Europe in terms of the number of customers. We offer a complete package of multimedia services designed for the entire family. Since 2006, Cyfrowy Polsat has been the leader of the Polish market in terms of the number of active services as well as market share, reporting over 5.0 million pay TV services.
Pay TV market in Poland
Pay TV services in Poland are offered by satellite platform operators (DTH), cable TV operators and IPTV providers. According to PwC estimates, in 2015 operators of satellite TV platforms had the dominant share, both in terms of the number of subscribers and revenue in the pay TV market – approximately 54% in terms of subscriber base, followed by cable TV operators with approximately 42%. The significance of IPTV was minor, with market share of approximately 4%. The graph below presents the pay TV market in Poland in 2015 in terms of subscriber base.
Pay-TV market in Poland in 2014 in terms of subscriber base
DTH providers compete with cable TV operators only to a limited extent. In particular, cable TV operators concentrate on inhabitants of densely populated areas where highly developed network infrastructure already exists or in locations where the establishment of such infrastructure involves a relatively low cost per customer, whereas DTH providers are able to provide their services, at no extra cost, to customers residing in both, urban areas as well as in less densely populated areas with no or limited cable TV infrastructure.
The Polish pay TV market is a mature market characterized by a high degree of penetration and low growth dynamics. The process of digitization of terrestrial TV in Poland, completed in July 2013, had been an important milestone in the development of the Polish pay TV market. Initially, competition from digital terrestrial TV (DTT) led to an outflow of pay TV customers, which was particularly visible in the case of low-end programming packages. Currently, customers are gradually returning to pay TV operators, which is associated with a limited number of channels available in DTT as well the low quality of these channels.
According to PwC, the subscriber base of the pay TV market in Poland is relatively stable and in reached approximately 5.8 million. There are three DTH platforms operating in Poland: Cyfrowy Polsat, nc+ and Orange, while the market is practically divided between the first two.
Cyfrowy Polsat is the market leader in terms of the number of customers. At the end of 2015 we provided approximately 4.5 million pay TV services (together with services of paid access to online television), including almost 940 thousand Multiroom services. Based on PwC forecasts we estimate that at the end of 2015 our share in the Polish DTH market, in terms of the number of subscribers, slightly exceeded 60%.
The second player in terms of subscriber base was nc+ platform, provided services to 2.1 million subscribers at the end of 2015, as reported by Vivendi (shareholder of the platform), which translated into a market share of ca. 36% in 2015. Orange cooperates with nc+ platform, offering pay DTH TV based on nc+ programming offer as an element of its integrated packages.
The Polish cable TV market is dominated by three major operators: UPC Polska Sp. z o.o., Vectra S.A. and Multimedia Polska S.A. At the end of the third quarter of 2015 the total combined share in the cable TV market of these three operators was estimated at approximately 70%. In addition, several hundred small cable TV operators operate in Poland.
According to PwC estimates, after several years of decline due to the process of digitization and the migration of customers to digital terrestrial television, the cable TV market stabilized at approximated 4.5 million subscribers. Additionally, the migration of cable TV users from analogue services towards digital services is still in progress. Possibilities of acquiring new subscribers are limited due to a high penetration rate of cable TV in urban areas as well as the reluctance of cable TV operators to make significant investments in cable TV infrastructure in the less-densely populated and rural areas of Poland. As a result, inhabitants of those areas currently have access only to a limited number of Polish terrestrial channels and alternative providers of broadband Internet and mobile telephony services. Polish towns with up to 50 thousand inhabitants, suburban and rural areas are therefore natural target markets for DTH because these areas have poorly developed cable TV infrastructure and are less attractive for cable TV companies to develop cable TV infrastructure there.
The leading IPTV providers in Poland are Orange Polska S.A. and Netia S.A. The remaining part of the IPTV market is divided among Multimedia Polska S.A. and local ISP’s.
The IPTV market is developing at a relatively slow rate in Poland, mainly due to technological constraints resulting from the lack of modern infrastructure with sufficient capacity to enable a high-quality and effective IPTV services and the associated high costs of implementation of IPTV services. We believe that the introduction of IPTV services by fixed-line telecommunications service providers such as Orange may have a negative impact on cable TV operators in Poland, since these providers plan to launch IPTV services primarily in urban areas, while having less significant effect on DTH providers who are less dependent on customers living in densely populated areas. It is difficult to assess if and when fixed-line telecommunication service providers will significantly develop their IPTV offer in rural, suburban areas and small and medium sized towns and the impact of such a development on the operations of DTH providers.
Development forecasts for the pay TV market
According to PMR forecasts, in the years 2015-2020 the number of pay TV customers in Poland will grow slightly at a constantly declining growth dynamics. This is mainly due to high market penetration and high saturation of the target group for terrestrial TV services with DVB-T standard services. To attract DVB-T users, pay TV operators will be forced to increase their competitiveness and to propose a unique offer to such users. According to PMR experts, bundled offers containing telecommunication and content services combined with sales of equipment (tablets, smartphones, laptops, TV sets) and supplementary services as well as an extended offer of exclusive content will be of great significance in own customer base retention. State-of-the-art technologies are rapidly gaining in importance as they enable operators to provide personalized content (such as content on demand) via Internet, to mobile devices in particular.
PMR expects the market value to grow in the years 2015-2020, however growth dynamics will remain low (CAGR of 1.7% for the analyzed period). The forecasts assume ARPU growth. According to PMR, in the years 2015-2020 satellite platforms will continue to be the biggest segment of pay TV market in Poland, reaching a market share of 55% (in terms of market value) at the end of the forecast period. Cable TV operators will remain the second major segment, with a market share exceeding 40% at the end of the forecast period. The significance of IPTV services will remain low, although the development of broadband access and optical fiber networks may have a positive effect on the development of this segment.
Our offer includes mainly digital pay TV services distributed directly to end-users via satellite through set-top boxes and satellite antennas. Our programming strategy is to offer a wide range of channels that appeal to the whole family, at attractive prices.
Currently, our set-top boxes enable the reception of over 170 TV channels, including over 60 in HD standard. Our offer includes general, sports, movie, lifestyle, education, music, news/information and children’s channels, as well as VOD/PPV, online TV, catch-up TV and Multrioom HD services. It is worth emphasizing that our offer includes popular sports channels: Polsat Sport, Polsat Sport News and Polsat Sport Extra. Polsat Sport and Polsat Sport News were ranked the first two most widely viewed sports channel in Poland in 2015 in the commercial group 16-49 (Nielsen Audience Measurement).
In addition to pay TV programming packages, customers using our set-top boxes have access to over 500 free-to-air TV and radio channels available via Hotbird satellite in Poland, including a dozen additional Polish-language channels and wide-known foreign channels
In June 2012, we expanded our service portfolio to include the Mobile TV service in the DVB-T standard. The Mobile TV service enables the reception of real-time television on mobile devices.
Video on demand
Our pay TV customers can also use our video on demand service VOD – Home Video Rental, offering paid access to new movies and hits via set-top boxes.
VOD is based on 13 satellite channels, with over 40 films available per month. Our customers may usually choose from a selection of about 13 titles per day, which are updated on a regular basis and can be rented for up to 24 hours.
See more: www.cyfrowypolsat.pl
Technology and infrastructure
Conditional access system
Access to TV channels offered in our pay programming packages is secured with a conditional access system that we leased from the company Nagravision. We use this system to control access to particular pay programming packages. Upon signing a contract for our services, the customers receive a set-top box together with an access card, which allows them to receive the pay programming offer. We routinely identify unauthorized access to our service because of the significant risks unauthorized access poses to our business.
Moreover, we cooperate with Irdeto to secure the digital content transmitted using DVB-T technology. Irdeto provides us with a conditional access system with the necessary technical support, as well as specialized and complete monitoring of the Internet enabling the collection and analysis of occurrences that may infringe copyrights of entities in our Group.
Our broadcasting center is located in Warsaw, Poland and enables us to transmit TV channels to the transponders we use on the Hot Bird satellites. Currently, it enables the playout of even up to 100 channels. It is equipped with up-to-date integrated video, audio and information systems and is used to broadcast SD and HD TV channels.
In 2014 we activated a backup broadcasting center located in Radom, which guarantees broadcasting continuity in the event of bad weather conditions or the necessity to carry out maintenance operations in our broadcasting center.
Migration to the MPEG-4 standard
Since October 2015 we provide pay TV services based uniquely on the MPEG-4 compression standard, thus withdrawing from using the older and less effective MPEG-2 system. The MPEG-4 standard is the leading edge of commonly applied compression standards which guarantees better quality of offered services and ensures more efficient use of satellite transponder capacity. The compression of all broadcast TV programs in the MPEG4 standard gave us the possibility to introduce new channels in high definition. As a result of the switch to the MPEG-4 standard we can offer our customers 16 additional channels in HD standard without incurring additional costs related to transponder capacity.
Services provided in DVB-T technology
Our Mobile TV services are provided in DVB-T technology within the multiplex dedicated to mobile television. For the broadcasting of channels we use a network of radio transmitters in 31 largest cities in Poland. Currently, there are around 5 million households and 15 million people within the technical reach of the multiplex.
As the only operator in Poland, we offer our customers our own high-quality set-top boxes at affordable prices.In 2015 set-top boxes manufactured in-house represented over 89% of overall set-top boxes sold or leased. As of the end of 2015, we produced a total of 6.9 million set-top boxes, including over 5.3 million HD set-top boxes. We still cooperate with external providers of set-top boxes, mainly Samsung, Echostar and Thomson, but back in 2010 we limited purchases from external providers.
We equipped all models of set-top-boxes produced in-house and designed to receive high-definition television with the IPLA application, enabling access to the content of our internet television after connecting the set-top-box to the Internet. Customers can also use the Multiroom service on our set-top-boxes.
In January 2016, we included a new set-top box, EVOBOX PVR, in our offer. This set-top box is the most technologically advanced satellite set-top box currently available from satellite platforms in Poland. It allows Cyfrowy Polsat’s customers to simultaneously record three programs while watching a fourth, it has a 500 GB disc and a built-in Wi-Fi modem.