TV remains at the forefront of what cable operators in central and eastern Europe are offering and is even becoming more important within the bundle of products that they offer, but bundling strategies are likely to evolve, according to a panel of cable marketing executives at the Digital TV CEE conference in Budapest yesterday.
TV is not becoming less important but connnectivity is becoming more important in bundling as a whole, said Robert Redeleanu, chief marketing officer, UPC Romania. In Romania there is evidence that there is no real potential for an internet-only service after UPC tested the market, he said.
UPC for the last six months had tried to understand what consumers would look for in the future and is looking at how entertainment and connectivity can best be bundled, said Redeleanu. “Time spent in front of the TV is actually increasing, with catch-up and so on. On-demand is only 2% of time spent in front of the TV,” he said. Redeleanu said that in CEE, piracy presents a significant hurdle to making money from VoD services.
Redeleanu said that there is a need for more a la carte channel options but it doesn’t make economic sense in every case. He said UPC is looking into segmenting the number of channels in each price point and establishing a base line up for linear TV and bundling this with SVoD and catch-up services.
Redeleanu said the relations between operators and broadcasters could see signficant changes as a result of the evolution of the market. In Romania, he said, key broadcasters had sought to terminate their must-carry status, meaning that cable rates could increase across the board. “It might put us in a different position in negotiations and in deciding what we take,” he said.
“The importance of TV in the overall bundle is actually increasing,” said Indrek Ild, sales and marketing director at Starman in Estonia, also speaking on the panel. “We look at the overall experience and people want to be entertained. Content and content discovery are becoming more important.”
OTT video providers could become content partners, he said. “For us the challenge is to combine different ways of consuming the content. Netflix or VoD is new and they have been good at promoting what they have to. If you are able to build and develop…an experience that you can bring.”
Ild said that people are using social media to get the best out of the content available. Operators have to become part of the recommendation ecosystem, he said.
Ild said that Starman was not making ony money from VoD services, partly because it had not discovered how best to promote and enable discovery of on-demand content to customers. “You have to bring this to the customer,” he said.
Ild said that Starman was also looking at ‘smart bundling’ and that there is more and more demand for flexiblity. He said there were some cusotmers taking internet services without TV and that it was necessary to work on better bundles to bring those customers back to TV. Smarter bundling could mean extending the in-home experience to mobile access and so on, said Ild.
In terms of the evolution of operators’ relationship with broadcasters, Ild said he expected channel provider increasingly to fall into one of two categories – those who supplied low-cost advertising-supported services that are part of a basic service and those that increasingly looked to deliver a premium bundle of channel and associated multiscreen and catch-up services, perhaps without advertising.
Vygantas Tutlys, head of marketing department at Lithuanian cable operator Cgates said that broadband was fast becoming a commodity and TV will be the differentiator. While users choose provider oftenon the basis of broadband speed, high-speed imtermet will soon be a standard product.
Tutlys agreed that partnering with OTT providers offered a good way forward and handed the task of marketing and renewing specific content to a partner.
Piracy meant it is currently difficult to demand payment for on-demanmd services marketed by operators, said Tutlys. VoD mainly served as a churn reducer, he said.
Tutlys said that people who had not taken TV services could be interested in specific mini-bundles. However, unbundling services could result in lower ARPU. “To sell a la carte in Lithuania you have to offer at least a six month subscription for it to pay off,” he said.
Ultimately, said Tutlys, channel providers would have to evolve their pricing and bundling strategies in line with market developments. “We are often seeing the basic pricing strategy lagging behind and they need to be more responsive,” he said.
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