Bringing TV Everywhere to emerging markets
The Delta Perspective August 2013
Four years after the TV Everywhere term was first coined by TWC and Comcast, the concept has been mostly associated with networks, cable and satellite operators in developed markets. With a strong effect on retention and implicitly revenues, TV Everywhere seems the perfect solution to fight against OTT threats or simply to differentiate against traditional competitors.
Is the possibility of watching your favourite PayTV shows everywhere though a prerogative of developed market customers and only a distant dream for the billions living elsewhere? And, from the operator’s perspective, are PayTV operators in high growth markets unable to reap the retention benefits of TV Everywhere due to specific market challenges?
Perhaps, if we look at the concept implemented in the US1. Definitely not, if emerging markets PayTV operators think outside the box and implement TV Everywhere in a different ‘shape’.
Challenges to TV Everywhere in emerging markets
The challenges to implementing TV Everywhere are significant, even in developed markets. In addition to these, emerging markets players are faced with 2 additional hurdles: poor infrastructure and low affordability.
The infrastructure in emerging markets as of today is not rising up to the minimum 1Mbps required for SD video2. According to Cisco3 estimates, the average mobile network speeds reached 4.1 Mbps in North America, 2.2 Mbps in Western Europe and 0.9 Mbps in Eastern Europe. In contrast, regions such as APAC, MEA and Latin America have much lower estimates of 0.5Mbps, 0.4 Mbps and 0.3 Mbps respectively. Watching even short movies on your smartphone under these circumstances can be at best frustrating. If we consider on top of the low mobile speeds the significant gaps in fixed infrastructure (to allow consumers at least to watch TV on devices other than TV while at home), then the magnitude of the infrastructure hurdle becomes daunting.
The affordability issues faced by many emerging markets customers are an additional complication. If hypothetically Netflix would be available in all countries, the relative affordability4 of the monthly streaming subscription to the service would be 5x lower for Asian customer and 13x lower for an African customer, compared to their US and European peers.
The second component of affordability is the cost data of data. Emerging markets operators have learned the lesson about the destructive effect of ‘all-you-can-eat’ bundles from their developed market peers, and have launched mostly capped bundles.
Why do it, if so difficult?
The question is perfectly valid – if it is so difficult, why should anyone bother to implement TV Everywhere?
The answer lies in listening to the customer, understanding the improving supply conditions and defining clear monetization venues.
Listening to the customer
The demand to watch TV anywhere, anytime and on any device is undoubtedly picking up. While this is a reality in developed markets, the trends are looking good for the other regions as well:
- Anytime: increase in on-demand (time-shift) usage. VOD is expected to reach approximately 0.25 billion individuals by 2016, with the strongest growth coming from MEA (47% CAGR between 2011 and 2016), Latin America and CEE (both with 20% CAGR over same period). Similarly, another 0.22 billion consumers will adopt DVRs, with highest growth coming from Latin America and CEE (37% CAGR and 31% CAGR from 2011 to 2016)5.
- Any place: rising mobile (place-shift) media consumption. The shift towards an ‘everywhere’ world is reflected by the exponential growth of mobile video users, expected to reach 1.6 billion by 2016 (growing at 43% CAGR between 2011 and 2016).
- Any device: proliferation of multiple devices. As adoption of both mobile and fixed devices increases, so will the expectation of consumers regarding the medium to watch TV. If in 2011 the consumer in MEA owned on average 0.3 fixed devices and 1.4 mobile devices, by 2016 they will own twice as many fixed devices while also adding another 0.3 mobile devices.
Improving supply conditions
On the supply side, the pace of 4G roll-outs though across the globe might decrease the challenge to TV Everywhere implementations sooner than PayTV operators expect it: CEE is expected to reach the 1Mbps threshold for SD video next year, with Asia Pacific and MEA following in 2015.
In the not-too-distant future, PayTV operators will wake up to find that the hurdles of today have evaporated, and other companies (such as OTT players) are serving the demand for watching TV everywhere.
Clear monetization venues
To complete the rationale of ‘why do it’, a strong consideration is the retention benefit of TV Everywhere. The effect is twofold, as users of TV Everywhere display both reduced voluntary disconnections and increased activity (in the case of prepaid customers). Anecdotal evidence from our experience in emerging markets shows that the effect of 1% increase in TV Everywhere uptake can translate in +0.22% increase in ARPUs (mainly due to inactivity reduction) for respective customers.
In addition to retention, the differentiating effect vs. competition should be also considered. The first to offer to customers the convenience of watching TV anywhere, anytime and on any device would reap the benefits.
Lastly, offering paid mobile TV to non-customers (e.g. Astro’s On-the-Go in Malaysia or MultiChoice’s DStv Mobile in Africa) at the right price (affordable, weekly payments) can open up new revenue streams altogether. Customers who would never dream of paying tens of dollars for traditional PayTV services (plus the once-off cost of a STB) can now access selected channels7 for a fraction of the price. Emerging markets players have proven again and again their ability to unlock demand through affordable pricing (daily or weekly pricing), thus overcoming the affordability barrier their customers are facing.
Learnings for PayTV operators in emerging markets
Due to the short lifespan of TV Everywhere and implementation challenges, large-scale adoption of the concept is still ahead of us, even in developed markets.
Emerging markets PayTV operators should draw two key learnings:
1. Considerations for the ‘go/no go’ decision
- Consider carefully the ‘go/no go’ decision, i.e. whether TV Everywhere should be deployed at all.
- Once a ‘go’ decision has been taken, focus implementation efforts on proven challenges: authentication method, technology and content rights.
1. Considerations for the ‘go/no go’ decision
Before proceeding to invest in TV Everywhere, emerging markets PayTV operators should first ask themselves whether they should do it at all. TV Everywhere is not the solution to all problems, and the complexity of implementation makes it easy to fail. Some out-of-the-box thinking might uncover mid-term options better suited for the current conditions.
The smartphone adoption, broadband infrastructure, competition levels and OTT presence are all factors determining whether TV Everywhere is actually beneficial, or another form of out-of-home entertainment such as online VOD or mobile TV should instead be considered.
While the answer is obviously never as simple (and requires deep market understanding), also the hurdles are at times not so impossible to overtake. An innovative approach to TV Everywhere has been taken by MultiChoice, a pan-african PayTV operator. Their mobile solution, branded DStv Mobile, overcomes the infrastructure issues plaguing the African continent by offering a DVB-H broadcasting solution. External devices such as Drifta or iDrifta allow customers to view 14 channels (sports, documentary, kids, etc) on a variety of smartphones and tablets.
MultiChoice deployed a freemium model, with DStv Mobile being offered for free to subscribers of highest package of their DTH offer (therefore representing the TV Everywhere offer). The operator has however decided to offer DStv Mobile to non-customers as well, for R49 (US$4.8) per month. A free version (emobile) is available with only 5 channels.
2. Implementation considerations
Drawing on the experience of PayTV operators in developed markets, emerging markets players should expect three specific challenges8.
In its short existence, TV Everywhere has faced strong adoption hurdles due to authentication. Cumbersome, multiple logins would make the user experience difficult, to say the least. What the PayTV operators aim to achieve is a Facebook-type login (single login used for accessing multiple 3rd party services). Technologies such as Adobe Pass have made progress towards streamlining authentication, though additional work remains ahead
Technology for providing TV Everywhere is far from uniform. Dish (US-based) uses Sling to provide in-home and out-of-home viewing, DirecTV uses the Nomad device while pan-African player MultiChoice deployed Irdeto and Valups devices (under commercial names of Drifta, Walka, etc) to provide a DVB-H solution.
C. Content rights
Perhaps the strongest hurdle to implementing TV Everywhere are the content rights. A vicious circle of poor measurement and low advertising revenues followed by low willingness of PayTV providers to pay for rights ultimately leads to limited content being available on the TV Everywhere platform (and thus low adoption among customers). Emerging markets could be in a more advantageous position, due to the increasing availability of and demand for local content (Nollywood, Bollywood, etc).
As a closing note, PayTV operators outside developed markets should start asking themselves:
- How long before the existing infrastructure hurdles will disappear in key markets (and OTT’s will enter)?
- What should be the short/mid/long term strategy of providing customers with ‘anytime, anywhere, on any device’ access to TV?
- What would be the objectives of a TV Everywhere strategy: defensive (e.g. differentiation, retention) or expansionist (e.g. new revenue streams from lower customer segments)?
- What assets do I need to invest in now to enable the mid & long-term strategy?
A clear roadmap of when, why and how to implement TV Everywhere (with clear understanding of financial upside and overall investments) will help PayTV operators be better prepared for the changes ahead.
1 The TV Everywhere definition coined by Comcast and TWC rests on 4 pillars: 1) the TV customer, 2) the authentication, 3) the paid content and 4) the multi-screen environment. Forbes defines TV Everywhere as ‘the name given to services that allow cable or satellite TV subscribers to use their credentials to log in and view programming on devices other than a TV, such as laptops, smartphones and tablets’; Source: Forbes
3 Cisco VNI The Zettabyte Era—Trends and Analysis (2012)
4 Relative affordability is calculated as subscription price per month / gross national income per capita per month; for Africa and Asia, the average subscription price of Netflix in Latin American countries was used as a proxy; Source: Netflix, SNL Kagan, World Bank (2013)
5 Source: Cisco VNI
6 Source: Cisco VNI
7 Typically the mobile TV/TV Everywhere offer is limited to selected channels due to content rights limitations but also cannibalization fears from PayTV operators
8 The 3 challenges are very specific to TV Everywhere; they are by no means the only challenges
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