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The International Communications Market 2010

ARPU and pay-TV penetration trends

Pay-TV operators have driven much of the development of TV technology in recent years. Many of the mature pay-TV markets that have led in this innovation have also experienced higher average revenue per user (ARPU).

The US is among the markets with both higher pay-TV penetration (90%) and higher ARPU (480). The cluster of countries that includes the US shows an apparent concurrency between levels of pay-TV take-up and the levels of ARPU generated. Take-up of advanced TV products and services (that can drive ARPU) is generally higher in these markets.

The cluster of countries including the Netherlands, Sweden, Poland and Germany share the characteristic of high analogue cable penetration. In most cases (the Netherlands, Sweden and Germany), cable is bought by consumers as a low-cost utility service. The number of digital satellite television providers competing in Poland has led to significant competition, which could affect ARPU levels when operators compete on price.

Given the relatively low amounts consumers spend on pay TV in these markets, convincing them to upgrade to advanced TV products and services appears to have been challenging, especially when consumers generally pay for devices themselves. Few markets follow the UK model, in which set-top boxes tend to be heavily subsidised.

A third cluster of countries in Figure 3.13 includes three BRIC countries Russia, India and China which have moderate to high pay-TV take-up but very low ARPU. This may well reflect the relative lower disposable income available to consumers to spend on TV, and the lower GDP in those countries.


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