Over-the-top video disruption in the content and broadband value chain

Transcription

1 Workshop Over-the-top video disruption in the content and broadband value chain October 2012 Cesar Bachelet and Nico Flores

2 2 Contents The threat and the response Breakout sessions Our take Discussion

3 Device The focus of OTT video services is gradually moving from the PC to the TV Now TV User-generated Professional NOW TV Netflix Free Short-form PC-based Paid-for Long-form TV-based PC YouTu be BBC iplayer Low High Value of content

4 4 The result is a potential substitute for pay TV Principal paths for video consumption DVD Examples of players in the value chain RTL TF1 Mediaset Sky Panasonic Universal Traditional TV Hulu Sony Vudu Tivo Roku Over-the-top VoD bypass Apple YouTube Netflix Orange Google TV Samsung OTT providers can compete without capex but still create significant traffic for ISPs while allowing device providers a greater role in the value chain

5 And operators risk being relegated to dumb pipes, outside the content business 5 Content and rights Programming Aggregation and packaging Distribution Consumer devices Programmes Channels Channel retailing Last-mile networks Set-top boxes Pay TV Producers Broadcasters Operators Managed CPE Vertical integration optional Operators competitive advantage unclear OTT video to the TV Producers Broadcasters OTT aggregators Operators Unmanaged CPE Endemol Universal iplayer Hulu Netflix itunes Blinkbox Google Sony Panasonic Samsung Apple Roku Arrows denote payments

6 In reality, OTT TV video entrants must negotiate some important hurdles OTT enablers 6 Infrastructure User adoption and behaviour ISP market Content and pay-tv markets Fixed broadband coverage Fixed broadband speeds Backhaul capacity Fixed broadband penetration Pay-TV penetration Connected TV device penetration and usage Data caps Traffic management policies Net neutrality regulations Pay-TV operator strategies Availability of high-quality FTA content Rights availability or exclusivity

7 while operators adapt to the new environment Operator OTT video strategies 7 Operator Strategies Belgacom TV Everywhere launched in July 2011 MovieMe on Samsung smart TVs in October 2011 Personalised recommendations introduced in June 2012 BSkyB Triple-play launched in 2006 Sky Go launched in January 2006 Acetrax acquired in May 2012 NOW TV OTT video service launched in July 2012 Mediaset Mediaset Premium initially launched as a prepaid DTT service in 2005, using rechargeable cards Premium Play multi-screen service launched in February 2011

8 8 Contents The threat and the response Breakout sessions Our take Discussion

9 9 Breakout sessions Group 1: How suitable is your market for new entrants wishing to launch OTT video services? Why? Group 2: As an operator, which strategies are you adopting in relation to OTT video services to the TV in your market? Why?

10 10 Contents The threat and the response Breakout sessions Our take Discussion

11 For entrants, the picture varies significantly from one country to the next OTT enablers The OTT TV scorecard 11 USA UK Netherlands Chile South Korea Infrastructure Fixed broadband coverage Fixed broadband speeds Backhaul capacity User adoption and behaviour Fixed broadband penetration Pay-TV penetration Connected TV device penetration and usage ISP market Data caps Traffic management policies Net neutrality regulations Content and pay-tv markets Pay-TV operator strategies Availability of high-quality FTA content Rights availability or exclusivity Sources: Akamai, ITU, OECD and Analysys Mason

12 We identified five strategies that operators can choose for OTT video Strategy Operator OTT video strategies Examples 12 Strengthen pay TV Multi-screen initiatives ( TV Everywhere ; Belgacom TV Partout, Sky Go, Viaplay, UPC s Horizon, Iris by Zon Fibra) Differentiation through customer or user experience ( La nouvelle TV d Orange ; UPC s Horizon, Iris by Zon Fibra) Reduce incremental cost of individual core services through bundles (BSkyB, Belgacom, SFR, UPC ) New business models (Mediaset Premium Ricarica, TeliaSonera, TnK) Launch own OTT Launch of own OTT video proposition (NOW TV, Viaplay) Partner with OTT Channel to market for OTT services (Talk Talk and LOVEFiLM) Sell QoS, CDN to OTT providers (Many telco CDNs) Profit from OTT Pricing or data caps (many operators) Limit OTT Traffic shaping (KT versus Samsung)

13 ISP market competitiveness and the right strategy depends on operators strength in their markets 13 Strong ISP power Limited competition No net-neutrality regulations Profit from OTT Limit OTT Net neutral ISP market Fragmented industry Net neutrality enforced Partner with OTT providers Strengthen pay-tv Own OTT services Weak Limited or no exclusive content Other operators are dominant Strong Exclusive content rights Limited pay-tv competition Position in content market

14 Share of pay-tv households 14 We do not anticipate high levels of cord-cutting because of OTT video services Pay-TV households by platform, North America, Western Europe and Eastern Europe, 2012 and % 80% 60% 40% 20% 0% North America Western Europe Eastern Europe Analogue cable Digital cable IPTV Pay-DTT Satellite OTT video

15 Share of secondary pay-tv services 15 But we do expect the impact of OTT video on additional TV sets to be much greater Secondary pay-tv services by platform, North America, Western Europe and Eastern Europe, 2012 and % 80% 60% 40% 20% 0% North America Western Europe Eastern Europe Analogue cable Digital cable IPTV Pay-DTT Satellite OTT video

16 16 Contents The threat and the response Breakout sessions Our take Discussion