Deloitte analyses top media trends for 2014

14 January 2014 - Press release

·         In the UK, between one million and 1.5 million homes will subscribe to two or more pay TV providers by the middle of 2014;

·         Revenues from performance rights should exceed £600 million ($1 billion) for the first time;

·         The value of premium sports broadcast rights worldwide will increase to £16bn ($24.2bn) this year, a 14% rise, or £1.9bn ($2.9bn) over 2013.

The technology, media and telecommunications (TMT) practice at Deloitte today announces its thirteenth predictions report for the media sector in 2014.

Deloitte predicts by the end of 2014 up to 50 million homes around the world will have two or more separate pay-television subscriptions. The additional subscriptions generate about £3 billion ($5 billion) in revenues.

This year’s predictions cover a range of topics, highlighting developments around pay TV, music, video-on-demand in Africa and broadcast sports rights.

Ed Shedd, head of Deloitte's UK technology, media and telecommunications practice, comments: “Deloitte predicts at least one million homes by mid-2014 will have two or more separate pay-television subscriptions. It could rise to 1.5 million by year-end if new providers launch dongles. A further 10 million homes will receive premium programming as part of their subscription to another service, such as broadband.”

Neil Allcock, lead media partner at Deloitte, adds: “In 2014 Deloitte predicts revenues from music performance rights, a license payable for the right to play recorded music to the public, should exceed £600 million ($1 billion) for the first time. This may seem insignificant relative to other parts of the technology, media and telecommunications sector, but for the £10 billion ($16 billion) recorded music industry, this will make a difference. Performance rights, which are collectable from all sizes of company, from bars to broadcasters, should continue to grow over the next few years and are likely to be the fastest growing industry segment. Over time performance rights revenues should reach £1.2 billion ($2 billion), although the timing for this is uncertain as yet.”

Key predictions include:

Doubling up on pay-TV

Over the coming years, the number of households with multiple pay television subscriptions should continue rising, as more content owners and aggregators, including platform owners such as cable and satellite providers, make their content portfolios available via subscription video-on-demand.

Most households will have just two pay TV providers, most typically a platform-based service and an SVOD, but about 10% of homes with multiple subscriptions will have three or more providers. By end 2015, this proportion may rise to 20% in selected markets, as more rights owners make their content available via video-on-demand, as broadband speeds increase, and premium programing is increasingly used as a customer retention tool.

Performance rights lift recorded music revenues

In every industry, no matter how bruising the environment, there is normally a green shoot. For the music recorded industry, the biggest growth engine is performance rights. Performance rights revenues may appear modest, but for the music industry they are significant, as receipts largely flow to the bottom line: collection in most countries is handled by collection societies, whose costs are deducted from fees collected.

Broadcast sports rights: premium plus

Deloitte predicts the value of premium sports broadcast rights worldwide will increase to £16bn ($24.2bn) in 2014, a 14% rise, or £1.9bn ($2.9bn) over 2013. This increase in rights fees will be driven by new agreements with certain top tier European domestic football leagues and major North American sports leagues. The double digit growth compares to average growth of 5% between 2009 and 2013, and exceeds the forecast 4% increase in global pay TV revenues for 2014.

Television measurement: for better and worse 

The measurement domestic television programme viewing should become more accurate for tens of millions of viewers, thanks to the introduction of hybrid measurement. This enables the inclusion of viewing taking place on PCs, tablets and smartphones into overall viewing numbers, and also includes other data sets, such as set-top box channel selections and video-on-demand server logs.

‘Cordless’ VOD leaps in Sub-Saharan Africa

Deloitte predicts the number of VOD users in Sub-Saharan Africa will grow by about one million – despite the lack of broadband infrastructure in the region. Users will select films, television programmes and short clips from a catalogue of hundreds of titles, which will then play on-demand, typically to television sets. This user behaviour will be equivalent to that taking place in millions of broadband-equipped homes around the world. However, in the Sub-Saharan Africa region, VOD content will play back from digital video recorders and the files will have been distributed principally via satellite links, and for a few households via digital terrestrial transmission.