We all know what Netflix should do next, but how can other TV operators provide a good strategic response? A couple of slides from my analyst briefing at TVConnect

1. Some Ideas on OTT strategy
We all feel we could take Hasting’s
chair, but do we have any simple OTT
advice for incumbent TV operators?

2. Viewer options to watch OTT TV
1. From my provider – as part of my subscription
– Incumbent pay TV – e.g. beIN, OSN, SKY Go, CanalPlay
– Incumbent Telco (usually force IPTV sale on ISP)
• high penetration but very low transaction rates
2. From a pure OTT service
– iTunes with dedicated country store
– Netflix / Quickflix / iCflix / YetAnotherFlix
3. Workarounds, using semi-legal setups
– VPN + Netflix, shared passwords, …
4. Piracy
– Torrents
– Pirate / Magic boxes
– Pirated DVDs
– Illegal OTT streaming

3. Strategy is easy for pure players,
hardest for Telcos
Objective Telco Pay TV Pure Difficulty
Innovation leadership ✔✔ ✔✔
✔
easy
Cross/Up-selling ✔ easy
Extend footprint ✔ easy
Stickiness – lower churn ✔✔
✔
moderate
Acquire new Subs ✔ ✔ ✔✔
✔
hard
Grow ARPU ✔✔ ✔ very hard
Lower Capex ✔✔ ✔ moderate
Lower Opex ✔ ✔ ✔ it depends

4. What are reasonable objectives?
Some 2013 metrics …
• Incumbent pay TV that
– owns their developed market
– 99% of revenue from DVB
– 80% of new development on IP
• 2 European pay TV operators both close to
10M DVB subs have well under 0,5M OTT subs
• Spectacular OTT flops so far from lack of
– content, convenience, reliability, marketing plan

5. Lessons already learnt
• Things that haven’t worked
– Social TV apps
• Nobody has been able to rival twitter/FB
– Stand-alone OTT to replace pay TV
• Things that have worked
– Convenience
– Catch-up TV can be a killer App
• Other lessons
– TVoD works better in mature markets (e.g.
France, US), subs need to be educated
– SVoD requires scale

6. Unanswered marketing
questions
• Will viewer trade DVB QoS for:
– lower price?
– greater choice of content?
– Mobility?
• Will TV become completely delinearized?
– Except maybe for sports