Aggressive multi-play pricing can jeopardise potential gains from growth in pay-TV services,

Analysys: A proliferation of price-driven multi-play strategies can grow triple- and double-play take-up but would come at the expense of overall spend on fixed telephony, broadband and pay-TV services in Western Europe. Increased commoditisation of telecoms services under the banner of triple play and driven by a small number of 'super-providers' could lead to a decline of 9% in total spend between 2005 and 2011. The result is that potential increases in pay-TV spend could be squandered as TV services are subsumed in heavily discounted triple-play bundles. However if the majority of service providers opted for a value-based strategy, striving to maintain value in core services by investing in TV content and technological innovation instead of relying on aggressive discounting, multi-play penetration would be lower but total spend would increase by 10% between 2005 and 2011. In reality neither a price-driven nor a value-driven strategy is likely to dominate throughout Western Europe: markets can and will segment and the strategies will, to a large extent, coexist. However, markets with limited growth opportunities in pay TV or very competitive broadband markets, such as the Netherlands or Sweden, are more disposed to price-based competition, and the long-term tendency across most markets is towards a price-driven scenario.

• Triple-play will remain a supplier-driven proposition, with 11-17% of Western European households expected to subscribe to triple-play packages by 2011, up from 3% at the end of 2005.
• Western European triple-play spend is predicted to be between EUR14.8 billion and EUR16.2 billion by 2011.
• There is still an opportunity for single-service providers, as single-service subscriptions, although declining, will account for 57-59% of market spend by 2011.

The Impact of the Multi-service Play: scenarios for future growth Publ 20060812