Does YouTube’s new virtual cable service, which includes live TV, worry the likes of Liberty Global and Vodafone? No, was the confident answer from these companies when they gathered in Brussels this week for Cable Congress. They are convinced that consumers want a wider choice of content than YouTube will give them, and access to some favourite SVOD services too, all through the same user interface and without switching HDMI inputs on their television.
And that is the fighting talk from the television side of their businesses. Figures from IHS Markit, shown earlier at the conference, had confirmed that broadband is much more profitable for cable operators than television – and a key theme for this conference was the non-TV opportunities that lay ahead in the smart home and the developing market for ‘lifestyle’ services driven by VR and Artificial Intelligence.
Television does still matter, though, partly as the glamorous component of a triple- or quad-play bundle. And Eric Tveter, CEO for Central Europe Group at Liberty Global, declared: “Consumers value simplicity and the one-stop-shop, and the triple-play, and they know and trust us. In one elegant user interface you can get Netflix and YouTube. And I would argue that skinny bundles will, in the end, cost households more.”
This last point is an important one when it comes to Pay TV aggregators versus the OTT world in general, including the growing collection of SVOD services. Tveter believes Liberty Global can give everyone in a household the content they want for less than it would cost to gather multiple SVOD or YouTube-like skinny bundles together. Anders Nilsson, CEO at Com Hem, agrees: “If you look at OTT services in our market, you would have to pay a prohibitive amount of money to get the same content that we provide.”
Nilsson added: “Our purpose has always been to aggregate, and to present services nicely and at a reasonable price. That remains the case going forwards.”
Ben Keen, the former Chief Analyst & VP at IHS Markit, who is now an independent analyst and advisor, noted an explosion in the number of general entertainment and thematic SVOD services, even ones for art-house movies and anime. He believes someone will need to re-aggregate all these services and make them available through a single subscription so that consumers are not overwhelmed by all the different offers and propositions.
But he warned that this ‘re-aggregator’ may not necessarily be the cable operators. “YouTube is one company that might make sense of it. Amazon is perhaps more of a threat [with its Amazon Channels concept] because they are aggregating channels and offering on-demand services and that represents a significant development.”
Tveter at Liberty Global confirmed: “It is up to us to be the best aggregator of content, and we call that connected entertainment.” He pointed to the global partnership his company has with Netflix to onboard that service and compared the SVOD provider to HBO, a premium content provider, albeit one that started life as a cable experience. The Liberty Global and Netflix partnership is based on a revenue share deal.
“I think Netflix is very complementary to our business. We are still evaluating Amazon, on the other hand.”
The whole cable industry has now decided that Netflix is a potential partner, but as Tveter seems to suggest, things could be more complicated with Amazon. The research firm Ampere Analysis has already noted that while Netflix is repositioning itself as a premium channel play, “Amazon has been positioning strategically as a platform content operation rather than a channel, and they therefore have very different business models.”
Speaking in Brussels, Dr Manuel Cubero, CEO at Kabel Deutschland and the CCO for Vodafone Germany, pointed to a successful partnership with Maxdome, Germany’s second largest SVOD service. He is also confident that cable operators can remain the aggregator of choice, something that will be helped by universal discovery engines that can recommend content from all sources, like linear Pay TV, free TV and SVOD.
