The following post comes from Kagan research, a group within S&P Global Market Intelligence. To learn more about the full report or Kagan research, please request a call.
Georgia's pay TV market has great potential to grow and increase in value. With household penetration of 42% at the end of 2016, a liberal economic climate and demand for high-quality content might make this the most dynamic market in Eastern Europe.
The history of pay TV in Georgia reaches back to the early 1990s when the first cable and multichannel multipoint distribution service, or MMDS, providers started their operations. In these early days, there was one MMDS operator and many small cable companies. Cable remained the leading platform until 2013 when it was overtaken by IPTV and direct-to-home, or DTH. Both the successful IPTV rollout and DTH growth in rural areas have resulted in a decrease in the cable subscriber base, which has shrunk by 52% over the past three years. IPTV and DTH platforms comprise 67% of the market, with DTH remaining at a constant level in recent years. Georgia ended 2016 with 1.1 million TV households, of which 453,200 subscribed to multichannel services.
With 188,000 subscribers at the end of 2016, IPTV represents 41% of the entire pay TV market in terms of subscribers. The modernity of advanced services like catch-up TV and video on demand, as well as competitive bundle offers, contributed to the success of IPTV.
The service was introduced by Silknet and Caucasus Online. MagtiCom acquired Caucasus Online in mid-2016, and since then, MagtiCom has dominated the market with its 110,000 subs, representing 58% of all IPTV subscribers as of year-end 2016. MagtiCom, which also operates a DTH platform, serves 169,300 subscribers in total and controls 37% of Georgian pay TV. Among the small players, CGC had 11,900 IPTV subs at the end of 2016.
Cable operators in Georgia served 51,400 subscribers as of the end of 2016. The digitization rate is estimated to be below 20%, hence why the introduction of broadband internet access and VoIP services has pushed subscribers toward IPTV. The market leaders, like Silknet, upgraded part of their subscriber base to IPTV, while Super TV completely ceased cable operations and migrated subscribers to MMDS. At the end of 2016, Silknet served 133,400 cable and IPTV subscribers in Georgia. Operating on two platforms, its total pay TV market share reached 29%.
Georgia had a DTH market of 112,600 subscribers at the end of 2016, translating into 25% of the whole pay TV market in terms of subs. In 2014, DTH-provider Black Sea Sat ceased its operations and since then the market is served by two operators: MagtiCom and Global TV, having 59,400 and 53,200 subscribers, respectively. The satellite sector has remained stable over the past couple of years. However, it has the potential for growth, especially in the rural areas of the country.
Fixed wireless plays a relatively important role in the Georgian pay TV landscape, representing 101,200 subscribers, or 22% of the entire pay TV market. The segment rose in 2015 when the former cableco Super TV migrated its subscriber base into MMDS. However, Kagan does not expect MMDS to continue to grow, as subscribers are keen to choose platforms offering more advanced services.
Georgia completed its digital switchover in July 2015. The network of DTT transmitters throughout the country reaches 40% to 45% of the population. The first multiplex broadcasts three channels, while the second operated by private company Stereo+ delivers 17 channels. Stereo+ is set to operate pay DTT and is awaiting the required license from regulators. The launch of small multiplexes carrying local channels is expected in March.
The total revenues of the Georgian pay TV market reached 56.7 million Georgian Lari in 2016. IPTV operators received the largest share of that sum at 57%, followed by MMDS with 21%. Cable and DTH secured a 12% and 11% share, respectively. IPTV generates the highest monthly ARPU at 18.32 Lari ($7.77). Cable and MMDS have ARPUs at a similar level, while DTH is the most affordable pay TV option with an ARPU of 5.29 Lari per month ($2.24/month).
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