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Pay TV: what is it today and what will it be tomorrow?

22 октября 2010

Until recently, things were fairly simple. Consumers either received the standard free-to-air (FTA) TV channels, or subscribed to pay TV, typically cable, satellite or analogue terrestrial services such as the ones Canal+ offered in France and Spain, to gain access to additional content. Some people in areas with poor reception paid a nominal subscription fee to receive FTA TV through what can be referred to as utility pay-TV services, typically via a cable connection or satellite master antenna TV (SMATV).

Boundaries started to blur five years ago, when Italian broadcaster Mediaset started making premium content available on a pay-as-you go basis through its Mediaset Premium pay-DTT proposition in 2005. Within six months, more than 1.4 million Mediaset Premium smartcards had been sold to retailers.1

The fact that several IPTV operators, including Belgacom, Orange France and PCCW, now offer a free basic TV package to customers subscribing to a multi-play bundle is only adding to the confusion.

The rate of change is about to accelerate. So-called ‘over-the-top’ players, such as Netflix and Hulu, which were previously focused on online video services to the PC, are increasingly making their services available on the TV through set-top boxes and Internet-connected TV sets. The ubiquity of fixed broadband and DTT infrastructure, particularly in Western Europe, now makes it possible for new players to offer a pay-TV-like experience without having to invest in their own pay­­-TV infrastructure. Indeed, players such as FetchTV have already started to do this in the UK, using retailers such as Tesco as a channel to market.

Within the next couple of years, consumers in most developed countries will be faced with a plethora of offerings on their TV sets from a wide range of players, as shown in Table 1. (Please note that the table attempts to simplify a complex market through some top-level classifications, and does not highlight all possible scenarios).

Table 1: Various types of paid-for TV proposition [Source: Analysys Mason, 2010]


Traditional pay-TV operator service

Video services on Internet-connected consumer electronics devices

'Over-the-top' online video services to the TV

IP-enhanced FTA TV

Key players driving this proposition

Pay-TV operators

Consumer electronics manufacturers

Online video providers



Canal+, Virgin Media, FASTWEB

Nintendo, Samsung, Sony, Toshiba

Apple iTunes, Netflix

YouView (previously known as Project Canvas), HbbTV


Core business

Services differentiate and add value to devices

Extending reach to main screen in the home

Complementing FTA services/additional opportunities to monetise content

FTA channels


Usually included on TV sets (via DTT tuner)

Typically not applicable

Included (via DTT tuner or FTA satellite TV)

Premium channels

Optional extra

Optional extra

Typically not applicable

Optional extra

Pay-per-view VoD

Included as standard

Included as standard

Included as standard

Included as standard

Subscription VoD

Optional extra

Optional extra

Optional extra

Optional extra

Consumer CPE

Set-top box

Internet-connected TV set/Blu-ray player/games console

Internet-connected set-top box

Set-top box

Delivery technologies

Pay-TV platforms plus broadband

Broadband (plus DTT for some devices)


DTT or FTA satellite plus broadband

Although industry insiders will be aware of the subtle differences between the different types of propositions, the average consumer will only be interested in the user experience, not the underlying technologies, and is likely to perceive all of the above as pay TV.

Vertically integrated pay-TV operators focused on the delivery of ‘walled garden’ video services through their own proprietary platforms (cable, IPTV, pay-DTT or satellite) will therefore need to reassess the relevance and attractiveness of their propositions in a rapidly changing environment, which is characterised by a growing range of options for consumers.

By Cesar Bachelet, Senior Analyst

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