Arthur D. Little analysis reveals the real cost of TV distribution infrastructures in Germany

By Lars Riegel

This is one of the main conclusions of Arthur D. Little in its new report, “TV platforms in Germany – 2014 and beyond.” In this report, Arthur D. Little analyzes current technological, market and regulatory trends in the German TV market and how they could impact the future German TV landscape. The report provides insights into the overall competitiveness of the various TV platforms in Germany with a Total Cost of Ownership (TCO) analysis.

One of the key developments in the German market is the move toward paid HD access. This will have a significant impact on the competitiveness of infrastructure operators. The RTL and ProSiebenSat.1 broadcasting groups are already focusing on paid HD access, and Astra has taken the first step in this direction with HD+.

In addition, current policy discussions might have an important impact on DTT. Web-TV is currently being subsidized by telecom network operators, which cover approximately 41 percent of Web-TV’s Total Cost of Ownership. Telecom network operators are pushing to get a revenue share from this business which in turn, raises questions of net neutrality. Web-TV should not be considered as a viable distribution channel for TV content as business models currently do not enable fair reimbursement for the use of network infrastructures.

DTT has the lowest TCO per household (EUR 20) and is 1.6 to 8.3 times more cost efficient than competing platforms. Given current political discussions, it is worth noting that the hypothetical cost of migration of all DTT households to alternative platforms would be significant – resulting in one-off costs of EUR 984 million and periodic annual costs of EUR 423 million, a majority of which would be paid by the consumer.

The German TV market is well developed, intensely competitive and set to become even more dynamic as a result of technology, market and regulatory trends. Global players and investors should look to Germany to find parallels in their own markets,” concludes Riegel.

To access the full report, please visit: www.adlittle.com/German_TV  

About the author

Lars Riegel is manager at Arthur D. Little’s TIME and Strategy & Organization practices.

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