Helen Jameson who is a freelance journalist and writer (www.spacescript.co.uk) asked me some questions about the TV industry in Turkey for an article for the Global SatShow event. Herebelow you can see her questions and my answers.
– What are the main trends that are evident in the Turkish broadcast market at the moment? Are people watching on mobile devices?
Let’s summarize the main trends in 4 pillars:
- OTT consumption is on the rise in Turkey like the rest of the world. In Turkey, number of DSL subscribers is 7,5 million while there are 1,8 million fiber broadband users. (There are around 20 million housholds in Turkey.) On the other hand, mobile broadband penetration ratio is 62 percent. Generally speaking with its young and dynamic population Turkish people are quite engaged on OTT TV services. Also one other major shift in the industry is all the major Pay-TV operators are offering OTT extension to their legacy DTH or cable type of services. It’s fair to say that in Turkey OTT migration is more or less completed on Pay-TV operators side. OTT content watching on YouTube is increasing dramatically. Netflix is also launched last year with localization support but didn’t create much traction mostly due to the limited content depth.
- On the other hand, the popularity of Turkish Drama series is continuing. Each season, a few tens of new series are introduced to the market while only a number of them continue till the end of the season. The export of Turkish dramas to foreign countries, especially to EMEA region is booming. Turkey is number 2 exporter of local content following the USA.
- Digiturk, Turkey’s greatest Pay-TV operator with more than 3 million subscribers acquired digital rights of Turkish football league for another 4 years in the expense of 500 Million USD. Historically Digiturk owns the rights since 2000. Also Digiturk has been acquired by Qatar’s Bein Group.
- Analog switch off is still not finalized and the plan for the Digital Switchover process is still unclear.
– How is linear TV in the living room faring? Is this still important to Turkish viewers?
Absolutely! VOD consumption on big TV screen is still niche in Turkey. Turkey is clearly a satellite country with more than 70% of households are receiving TV broadcast via satellite. There are more than 10 million FTA satellite receivers installad and people are watching mostly Live TV.
– What about content? Is content very regional or is it very much a mixture of content demand and which other countries want this content?
Similar to most of the other countries, local content is key in Turkey. Although millions of people are watching on-demand US series like “Game of Thrones” , “Westworld” etc. through illegal download or Netflix type of legal OTT services, the most watched Live TV content is either Turkish dramas or Survivor type of local shows.
– Will the Turkish broadcast industry need to make upgrades to technology and services to meet demand in the country? – Is satellite an important means of delivery of Pay TV services?
- Yes, there are still SD decoders and the majority of the FTA channels broadcasted are in SD resolution. There are only a few 4K Ultra HD Live channels. In order to meet end user demand for OTT services fair usage policy is expected to be cancelled and broadband connectivity which is around 5 Mbps in average should be improved. On the other hand, 4K Ultra HD sets are deploying in massive numbers since a few years even if there is not much 4K services available.
- Satellite is definetely an important medium. In Turksat satellite there are more than 500 FTA channels and satellite reception is very common. Digiturk, D-Smart, Tivibu and Filbox are DTH operators those number of customers is covering a big portion of Pay-TV market.
– Overall, how big would you say the Turkish market is?
Turkish market is one of biggest TV market that has a significant growth potential. Turkey has a very young and dynamic population and Turkish economy seems stable and robust in most fundemental terms although Turkish Lira is performing poor against US Dollar. Pay-TV market penetration is still around 25 percent that is much less than the European coutries. IPTV service of Turkcell (Turkcell TV+) and DTH service of TT group (Tivibu) is growing fast in the past quarters in terms of net adds. There is a strong competition in the market in terms of producing appealing content and advanced technologies like 4K Ultra HD resolution, cloud-timeshift and integration of OTT services.
– What growth do you expect to see in the market in the coming months and years?
- In the pay-TV space, I think Turkcell will be investing both in OTT domain and a big TV screen domain to increase the customer base and to address untapped markets. TT group on the other hand is also playing hard to monetize the digital rights of Champion League games that is still valid till the end of 2018 season. Regarding Digiturk, following the acquisition and the ownership issue is clarified now Digiturk is going through a transformation process including rebranding of the channels as well.The other players are more or less static in the past years so I’m not expecting much move.
- On the broadcasting side, there are a few major FTA broadcasters with nice rating figures and they are making good money thanks to the advertisement. The market size will be dependent to the ad revenue and in general other digital mediums are receiving interest that could lead to decrease in TV ad revenue. Hence, they are looking alternative ways like second screens apps in order to achieve targeted, personilized ads.
Turkcell Superonline fiber internet service and Turkcell TV+ service have both surpassed 1 million subscriber threshold. The homepass for fiber broadband service is 2,6 million households now in 15 cities out of 81 cities in Turkey.
In order to celebrate this milestone, during December 2016 Turkcell will be upgrading the broadband speed of all the customers to 100 Mbps bandwidth. Similarly, Turkcell TV+ users will be authorized to watch all the channels independently form their content package within December. You can watch the press release video here. (in Turkish)
Turkcell’s multiscreen TV platformu Turkcell TV+ has reached 1 million customers as the end of October. Thanks to the 4.5 technology the average watching time on mobile clients has reached to 28 minutes per day. The total download of the mobile Android and iOS clients already reached to 2.5 million. Premier League and NBA official broadcaster Turkcell TV+ is also delivering 2 4K Ultra HD Live TV channes together with the brand new 4K STBs.
100 thousand customers with a single invoice
Turkcell is offering a special bundle package that includes a complete set of solutions. It has 50 Mbps limitless internet (with a 125 GB fair usage quota) 4 GB mobile broadband, 500 minutes voice, 1000 SMS, and Turkcell TV+ offer, This complete package only costs 99 TRY. This package already had 100K subscribers in quite short time.
A few weeks ago Turkcell announced the results for the year 2015. You can have a look to the presentation here.
It is possible to get key figures about Turkcell’s popular TV service Turkcell TV at pages 11 and 12 of the presentation.
Briefly, the service has reached to a total of 588K subs within almost 1,5 years.
Out of this 600K base, the number of IPTV homes are 224K. This has been achieved in 1,5 years which indicates around 40K net addition per quarter. If you look to the trend and check how quickly the number of subs is increasing it’s really impressive.
Having a look to the customer gain in TV market in the past year, Digiturk, D-Smart and Teledunya are all steady with not much changing number of customers. On the other hand, installed base of Tivibu and Turkcell TV+ are on the rise.
Actually, the rise on Tivibu side is due to the new satellite platform. IPTV domain of Tivibu is kind of stucked lately.
Turkcell Superonline has 900K fiber internet customers. Currrently, the ratio of households receiving triple-services is around 25 percent. It’s quite obvious that Turkcell’s main focus will be to increase this ratio over the coming years and eventually to provide tripleplays services to the complete base. Apperantly future is bright for Turkcell. Let’s keep monitoring the progress and how sustainable is this ramp-up.
D-Smart’s Blu service is rebranded as BluTV powered by a new logo and new website design.
Now, the service costs 6.9 TRY / month. There are a total of 30 Live TV channels around half of which are basically premium channels such as NBA TV, Nat Geo, Eurosport, BBC.
In addition to Live TV channels, there is also a wide variety of VOD titles from several genres.
As a matter of fact, this simply seems yet another OTT service. So far, in Turkey OTT TV business model is yet not correctly formulized. Around 2 years ago, I’ve posted an article about the OTT players in Turkey. (link) I think none of them could achieve to build a profitable business model since then.
The real challenge for an OTT TV service is first to overcome the barrier of collecting money. if this service is an extension of an Service Provider’s existing bill, things are much more straightforward. For instance, if any OTT service is provided by an ISP or mobile operator, chances are the user will be OK to get charged an extra by the monthly bill she/he is already paying.
Nevertheless, if the service is an all-access type of service such as Netflix then the OTT player have to build an payment channel with the subscriber. To that end, the provider shall either ask the credit card info of the user or ask for mobile payment. In any case, it’s quite discouraging to fill out all the payment data. That’s why I had difficulties to feel optimistic about the OTT TV services in Turkey. I think either Tier-1 operators OTT TV service or world-leader like Netflix could compete in this industry.
Quite some time ago, I’ve written a post about the Vodafone’s new Internet service Vodafone SuperNet.
Lately, Vodafone Turkey announced a new 3-play service that is basically called Vodafone Televizyonlu SuperNet (Vodafone’s Supernet together with TV). As a matter of fact, the TV service is actually provided by another company called Filbox. (please revisit my earlier post about Filbox here)
With this recent announcement of Vodafone all the top 3 telco’s in Turkey (Turk Telekom, Turkcell & Vodafone) are now providing 3-play services. Costomers have the option to enjoy receiving all the major services from one single operator and getting charged by a single invoice. Basically, this is the new trend all over the world. Operators are playing and they are aware of the fact that they need to play well in order to survive. You can check this link for further details about the campaign.
Herebelow you will see a very good read by my dear friend Constantinos from IHS Technology on the acquisition of Digiturk by BeIN Media.
Digiturk, the Turkish satellite pay TV operator, has been acquired by BeIn Media Group. An official statement, earlier this week, by the CEO of the Qatar-based group, Sheikh Nasser Al-Khelaifi, revealed that the deal (rumoured since December) has been completed. There was no official disclosure of the amount of money that BeIn Media agreed to pay, however press reports made reference to an amount close to $1.5 billion. According to the reports, BeIn Media Group will fully control the Turkish pay TV operator, having purchased both the 53% stake of the Cukurova Group as well as the remaining 47% stake owned by the US-based fund Providence Equity.
Digiturk was put up for sale in May 2013 when the government-controlled Savings Deposit Insurance Fund (TMSF) seized assets belonging to the Cukurova Group. The seizure of assets came as a result of the failure, from the part of Cukurova, to serve a $450 million debt obligation to the state. The acquisition of Digiturk is the latest in a string of investments by the Qataris in the Turkish media market: In 2011, BeIn’s parent company the Al Jazeera Media Network paid $40 million for the pay TV channel Cine5, which was later rebranded as Al Jazeera Turk. In April 2013, Al Jazeera Media Network paid $20 million for a digital terrestrial licence for Al Jazeera Turk. In the first quarter of 2014, the Qatari company launched a new portal (Aljazeera.com.tr), new mobile applications and a digital magazine.
|Our analysisBeIn Media Group’s deal to acquire the leading pay TV operator in Turkey is significant for a number of reasons First, it is the largest-ever takeover deal in the Turkish media market. The previous record was the $1.1 billion sale of the Turkuvaz Media Group to Calik Holding Group back in 2008. The deal also marks the first time that the Qatari group has entered a new market through the acquisition of a pay TV operator.Since acquiring the ART Sports channels in the Middle East in 2009, In the Middle East, Al Jazeera has extended its sports channels around the world. The company first launched the BeIn Sports brand in France with the acquisition of rights to the French football championship and other rights in 2012. Since then, the channels have rolled out in Asia and North America and in 2014 the Qatari group acquired Setanta Sports Australia. Most recently, BeIn Sports launched in Spain. The BeIn Sports brand is now present in 33 countries: the Middle East & North Africa (23 countries), North America (USA & Canada), Europe (France & Spain), and Asia (Indonesia, Thailand, Philippines, Hong Kong, Australia and New Zealand.
BeIn Media Group now controls – either directly or indirectly via the Al Jazeera Media Network – a chain of major media-related investments in Southern Europe. The launch of Al Jazeera Balkans in Sarajevo, Digiturk in Turkey and a long-rumoured investment in Mediaset Premium in Italy will extend its investments furthe.
Entering a market such as Turkey provides a stronghold for further expansion in the near region. Turkey by itself is the largest TV market in South-Eastern Europe (with 83 million people and 20 million TV households). Of equal importance to the Qatari business planners is that their potential target audience can include any geography where the Turkish language is spoken: meaning a roughly estimated audience of 140-150 million people in the Balkans, Caucasus, Central Asia and the Middle East. Digiturk TV packages, especially those carrying Turkish Super League football, have been available in Azerbaijan since October 2013 and the company has been planning expansion into Kazakhstan and Uzbekistan.
BeIn Media Group will benefit from the high growth potential of the pay TV market in Turkey. The Turkish pay TV market according to IHS Television Media Intelligence is far from saturation, unlike other major European markets: in the next five years, pay TV subscribers will experience a growth rate of 32% (rising from 5.5 million in 2014 to 7.5 million in 2020) while pay TV revenues will grow at a rate of 68%, rising from $1.2 billion in 2014 to $2 billion in 2020. Digiturk enjoys a powerful position in the Turkish pay TV market: By the end of 2014, it controlled more than half (54%) of the total number of subscribers and almost three quarters (73.5%) of the total revenues of that market, according to IHS.
However, Digiturk is about to face fierce competition from Turk Telekom (which operates both an IPTV and an OTT TV platform) on its home turf as the telco has acquired the media rights for the UEFA Champions League & Europa League matches for the period 2015-2018 as well as the rights of the Italian and French football leagues.
Turk Telekom Group has just announced results of Q2 of 2015. The page below is just a snaphot from the 2105 Q2 Investor Presentation.
Clearly, acquisition of UEFA Champions & Europa Leagues content rights is worth to mention. Please see the following 2 of my earlier posts about this topic.
It’s also interesting to see that the number of Tivibu Home (IPTV) Subscribers is in decline over the past 3 quarters.