OTT and Smart TV strategies in the US

Transcription

1 OTT and Smart TV strategies in the US Panel: Evolving business strategies for smart TV and smart phone: an international comparison EUN-A PARK, Ph.D. UNIVERSITY OF NEW HAVEN PACIFIC TELECOMMUNICATIONS COUNCIL ANNUAL CONFERENCE, 2015

2 Defining Over The Top (OTT) video online video from services and operators that is distributed over a number of channels including fixed (e.g. to computers, connected computer equipment, tablets) and mobile (e.g. smartphones and tablets) broadband - it is not associated with a pay TV service provider subscripbon (ABI Research, 2014). Streaming video services (blip, NeOlix, Amazon Prime, vevo, hulu) All use the consumers data connecbon to bypass and replace the services provided by the ISP, MSO or mobile operator

3 OTT Threats & Responses Source: Ovum, 2013, cited by Song (2013)

4 Pay TV Providers: Response Strategies MulBscreen (N- screen): everywhere, anywhere MoneBzing content beyond the subscripbon Online pay TV packages: a fully OTT model Cloud pay TV: app in smart TV or disrupbve BM Hybrid broadcast/broadband services Source: Gartner, July 25, 2013

5 From Protecting to Partnering &Competing Type Subtypes Target/Ra0onale Examples MulBscreen MoneBzing content beyond the subscripbon TV Everywhere Match consumer behavior viewing pa_erns Defensive strategy against OTT service providers TV Anywhere Match consumer behavior viewing pa_erns Defensive strategy against OTT service providers Pay- TV Lite Reach free- to- air only households Complement content to other pay TV services subscribed to by households OTT VOD Services on Connected Devices MoneBze content beyond the subscriber base through partnerships with connected devices (mainly with smart TV vendors) Cablecom Verizon FiOS Belgacom TV SingTel mio Play TV Sky Go MEO GO! MulB Now TV Viasat Belgacom MovieMe Singtel mio Play TV

6 Type Subtypes Target/Ra0onale Examples Online pay TV packages Online pay TV packages (DomesBc) Online pay TV packages (Int l) Reach out- of- footprint households and households reluctant or unable to install equipment in the home (a satellite dish or difficult cabling, for example) Facilitate worldwide distribubon of pay TV operators local channels and content to the expats Cloud Pay TV Pay TV as an App Replace physical STBs with virtual ones reducing operabonal expenditure and equipment Cut out pieces of the value chain Hybrid Broadcast/ Broadband Services Cloud based TV No CPE deployed No network deployed Economize digital traffic over the access network Provides a seamless transibon from pay TV to OTT services Visasat (Nordics) YouSee s YouBio (Denmark) Volia (Ukraine) Viasat Digturk Di_o TV AerTV Telia Sonera (Elion) and Samsung (Estonia) Numericable and Loewe (France) Magine (Sweden) TotalChannel (Spain) Aereo (USA)* Weepee TV (Belgium) aiotv (InternaBonal) TalkTalk TV, BT Vision over YouView plaoorm Source: Gartner, 2013, cited in Song (2013) * Since Nov. 2014, it is in bankruptcy.

7 N-Screen Strategies TV broadcasters TV Networks NBC, FOX, ABC Service Start Date Contents Technology Revenue Model Hulu March, 2007 ads based >6,500 movie Hulu Plus June, 2010 VOD (streaming) and TV series Monthly subscripbon ($7.99 a month) No. Of Subscribers 4 mil. (Dec., 2012)

8 Cable TV TV Everywhere/TV Anywhere Providers service Start date contents Business model Real 0me channels Comcast Xfinity TV online 09/2012 > 280,000 contents Free for Comcast subscribers online subscripbon TWC Cox Stream Pix 02/2012 >2,000 movies & TV programs (NBCU, Disney, Sony, etc.) Time Warner Cable app. Cox Advanced TV 10/2010 4,000 hours VOD indoor 1,100 hours VOD outdoor 3/2011 >5,400 movie &b TV programs Charter Charter.net 12/2012 >50,000 movie, >220,000 TV contents Cable vision Bright House Sudden Link OpBmum TV 2 Go Bright House app. 02/2012 Accessing on 40 individual contents apps 11/2010 Accessing on Individual contents sites Suddenlink2GO 06/2011 >2,300 movie, >38,000 TV contents $4.99 per month free for Xfinity HD triple service subscribers Free for TWC cable subscribers Ads based Free for Cox subscribers Ads based Free for Charter subscribers Paid Contents apps Free for Cablevision TV subscribers Free for Bright House subscribers Ads based Free for Charter subscribers

9 Satellite TV Providers service Start date contents Business model DirecTV DirecTV Cinema 2012 > 2,800 movies, >3,700 TV contents DiSH Network DiSH Anywhere 08/2010 >7,400 movies, 3,400 TV contents 09/2011 >5,600 movies, >400 TV contents streaming Free for DirecTV subscribers Pay per view Free for DiSH subscribers $10 per month Real 0me channels 61 - IPTV Providers service Start date contents Business model Real 0me channels Verizon Flex View 11/2010 >5,400 movies, >11,200 TV contents AT&T U- verse Online 05/2010 >3,000 movies, >9,600 TV contents Charging individual contents Free (1,772 movies & 8,229 TV contents) 75 -

10 Questions Why have OTT services not been deployed by US mainstream audiovisual providers, compared to those in Japan and Korea?

11 Reason 1. Differences b/w public TV dominant & commercial TV dominant nations. Public broadcasters have less incenbve to avoid/oppose disrupbve innovabons since their business models does not involve profit mobve to the same extent as the commercial broadcasters in the US. Seven- day Catch- up TV > OTT VoD: UK OTT VoD > Catch- up TV: USA OTT VoD > Catch- up TV: USA Seven- day Catch- up TV > OTT VoD: UK OTT VoD > Catch- up TV: USA Source: OVUM Jan. 21, 2013, cited in Song (2013)

12 Reason 2. Much Higher Production Costs in the US The per capita audience cost has been increasing in the US as the primebme audience has shrunk. The lower cost implies that the risks in alternabve distribubon plaoorms is lower. For risk averse distributors, it is less a_racbve to distribute more expensive content over untried channels, where the revenue models are not well- established. TV Cost & CPM Trends- Network TV Prime0me (M- Su)

13 Reason 3. The US has lower proliferation of 3G and 4G mobile devices on which OTT content can be accessed, compared to Japan and Korea Global mobile 4G and 3G subscribers in Q2 2013: Informa Country 4G subscribers Q G PenetraBon Launch date Country Global 126 million 1.77% Q Global 3G subscribers Q ,750.3 million 3G PenetraBon 24.55% USA 62.5 million 19.61% Q China million 24% Japan 26.1 million 20.67% Q USA million 70.60% South Korea 23.0 million 47.17% Q Japan million 88.30% Share of popula0on that owned and used connected/smart TVs in 2012, by country Share of mobile phone users in Japan, the U.S. and Europe, who use the following features of their mobile phone

14 Reason 4. The pricing models for mobile content Percentage of mobile audiences that watched TV or video on their mobile device in Japan, the U.S. and Europe in June 2010 First is the subscripbon to the OTT service itself (e.g., NeOlix), and of course this is free if the OTT service is adverbsing based. The second payment is to the network provider that provides the connecbvity for the service. For example, the mobile carrier (Verizon Wireless) that delivers the content to the mobile device. While the former payment might be the same in US and Japan/Korea, US users have much higher payments for the la_er since they have (a) slower connecbon speeds on mobile networks, (b) lower data caps and (c) higher prices for data.

15 CONT. US mobile data prices are the highest in the world h_p:// how_bad_do_we_really_have_it_bandwidth_caps_around_world h_p:// mobile- data- prices- among- most- expensive- world US users get lower speeds h_p:// h_p:// In addibon, US broadband providers have been proposing data caps h_p://arstechnica.com/business/2014/05/comcast- plans- data- caps- for- all- customers- in- 5- years- could- be- 500gb/

16 Conclusion OTT services in US face both supply side and demand side bo_lenecks compared to the market in Japan and Korea