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Pay-TV operators start to move into OTT services: a logical extension to multi-screen services

21 мая 2012

Analysys Mason attended the Connected TV Summit in London at the beginning of May. At previous events, most pay-TV operators feared over-the-top (OTT) services. However, at this Summit we saw multiple examples of pay-TV operators that are eagerly embracing OTT services as an extension of their multi-screen services. Compelling content will be a prerequisite for success when targeting new consumer segments.

OTT services are a logical extension of multi-screen services

Many pay-TV operators are enabling a multi-screen experience for their subscribers, extending the reach of their content beyond the set-top box and the TV set to other connected screens, subject to the relevant content rights (for further information see Analysys Mason’s Viewpoint Four screen strategies for operators: making the most of all screens). By offering these services to unmanaged devices, such as PCs and tablets over various networks, operators are moving beyond the closed ecosystem of traditional pay-TV, which relied upon dedicated devices and QoS. New technologies, such as adaptive bitrate streaming, are making it much easier to break these dependencies.

Having invested in the required technology to deliver such services, operators will automatically aim to recoup their investment through reduced churn and/or any monetisation opportunities that multi-screen services can bring. However, in order to make the most of these assets, it makes sense for operators to use the same technology to reach consumers through the growing range of connected devices that can be used to consume video. Examples highlighted during the Connected TV Summit include DIRECTV’s partnership with Samsung, and Microsoft’s operator partnerships for the Xbox 360.

Many consumers who do not currently use pay-TV services cite a lack of interest or insufficient value in existing pay-TV propositions to justify investment. However, many consumers may also have decided not to take a conventional pay-TV service because of issues with:

  • commitment: Some consumers are not willing to commit to the ongoing expenditure of a standard pay-TV subscription package, and would rather get their content in a more flexible manner, only paying for specific content as needed.
  • coverage: Consumers may be outside the pay-TV operator’s coverage area. In some cases, there may be planning restrictions around the placing of satellite dishes, preventing people from obtaining such services.

OTT services give pay-TV operators the ability to target people who do not subscribe to pay-TV, while using the same technologies to deliver services that add value for their traditional subscribers. Various pay-TV operators, including Elisa (Finland), Magnet Networks (Ireland), ViaSat (Scandinavia) and YouSee (Denmark), mentioned established or planned OTT deployments at the Connected TV Summit. The key issue for them is to ensure that the offers are designed to complement, rather than cannibalise, each other.

Compelling content is a prerequisite for operator OTT success

Operators wishing to go down the OTT route need to ensure that they have compelling content that attracts the attention of consumers. Strong, established players, such as BSkyB in the UK and Ireland or ViaSat in Scandinavia, can capitalise on their premium content, such as movies and sports, offering consumers new ways of accessing and consuming it.

Many operators may not be in a financial position to get the rights to new releases from Hollywood studios or the best live football matches, and will therefore need to think of alternative approaches. Finnish operator Elisa presented an interesting approach at the Connected TV Summit. The operator has invested in EpicTV, an OTT service focused on extreme sports. Elisa is hoping to target its niche content towards a potential audience of 200 million enthusiasts worldwide, representing nearly 40 times the population of Finland. The service, which is now being launched in 15 European countries, costs EUR6.90 per month, and is available on PCs, connected TV sets, tablets and smartphones. 

 

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