There are a couple of major trends that are widely reported in the network operator space.
On one hand, traditional payTV is seeing cord cutting/cord shaving and subscriber decline. On the other hand, there is huge growth in the delivery of broadband services to North American consumers. Based on this, you would generally expect to see traditional payTV operators strongly focused on delivering broadband services and de-prioritizing the delivery of TV. We have seen evidence of this trend and I believe that the broader adoption of our TVaaS offer, EspialTV, is in large part due to the desire for operators to focus on broadband, while we ensure they have a compelling TV service. We have also seen evidence of another trend which is the focus of this blog which I have found to be very interesting – namely the desire for Internet Service Providers (ISPs) to start offering TV services. These companies have usually had no previous experience offering TV services – so why are they getting into TV now?
ISPs are often smaller, regional, and focused on specific audiences. They tend to be nimble, responsive and are often offering an alternative to a larger operator with better services at a better price. ISPs will typically target service adoption by at least 30% of homes passed. The motivation to include TV in the bundle is driven by a desire to achieve or beat that penetration rate. TV impacts penetration in the following ways:
- TV is a sticky service, changing broadband providers is easy but TV has familiarity for the household members making it more difficult to switch providers.
- The incumbent TV & broadband operators provide TV services to approximately 50% of subscribers, therefore if an ISP does not have a TV service, they may be forgoing 50% of their market opportunity in a competitive environment.
- In summary, working with operators and understanding the above key factors, we have seen ISP penetration rate rise from 30% to 50% after they included a TV offer.
Based on this, ISPs are increasingly looking for a TV offer in their broadband bundle but it is not always easy. Let’s see what some of the challenges are and how ISPs can overcome them.
The first challenge is that TV can be technically challenging and expensive. The solution needs to bring together multiple moving parts, be able to scale to support times of huge demand like Superbowl but be cost efficient at times of more average demand. The solution must be compelling for subscribers at the time of initial deployment but also must evolve on a continuous basis to support trends in technology and consumer expectations. The service must be delivered where the consumers want it, which often means on retail platforms like mobile, Amazon Fire, Roku or AppleTV – this means applications need to be submitted to and updated regularly on multiple app stores. All these considerations can present significant commercial and technical risk if traditional deployments were to be considered. However, multi-tenant, TVaaS solutions like EspialTV can now ensure that TV solutions can be deployed rapidly, with well defined costs and at low technical risk.
The second challenge is how the ISP gets access to the content. There are multiple content owners, and each may have differing contracts to align with. The concept of dealing with these multiple content owners individually can be daunting – especially when an ISP may have no experience of such engagements.
Thankfully there are several industry associations like NCTC in the US and CCSA in Canada who have pre-negotiated contracts with the main content owners. By joining such associations, the ISP can leverage the pre-negotiated contracts – they still may have some additional steps like the completion of technical questionnaires but again the EspialTV team can assist. Local channels can be a final challenge in the US, but the EspialTV team can direct ISPs to organisations who are experts in negotiating local content rights. We have years of experience going through this process and are well versed in guiding and helping ISPs onboard a TV service as little as three months.
So, in summary, we are seeing multiple ISPs entering the payTV market and being willing to face the challenges associate with this. These challenges are significantly mitigated by leveraging a TVaaS solution like EspialTV and through finding the appropriate industry association and/or partner to navigate through any issues. With the appropriate assistance ISPs are now able to increase penetration and to reduce churn. We would be very happy do discuss how we have helped multiple ISPs deploy TV in both the US and Canada.
