German cable needs to consolidate; Horizon launch planned for 1H13

The German cable industry needs to be given the opportunity to consolidate in order to compete effectively with much larger telecom competitors, according to Liberty Global president and CEO Mike Fries.

Taking part in the opening panel session at ANGA Cable this morning, Fries said that cable is still a small business relative to the overall telecom industry. While rivals are able to market and launch products across a national territory, cable is still restricted to particular regional footprints. Cable needs scale in order to compete, said Fries, pointing out that Liberty Global had now invested €7 billion in the market.

Referring to Kabel Deutschland’s recent acquisition of Tele Columbus as well as Liberty Global’s acquisition of Unitymedia and Kabel BW, Fries said the industry had waited a long time for consolidation to take place. He said that at the point where the cable business was finally building a success, it was strange that the industry was now being criticised for consolidating. “The industry is finally having a little bit of success against competitors 20 times larger,” he said. “Things are still lower and slower here [in Germany] in broadband penetration and speeds [than in other countries]. Things will only get better if companies like ours invest and that will only happen if companies have scale.”

Referring to Liberty Global’s next-generation set-top, Horizon, Fries said that it would be introduced in Germany in the first half of next year. He said that the box would marketed at a small incremental fee but not a huge one, in order to drive take-up. Fries said that Horizon was designed to enable viewers to watch content on multiple devices, bring apps to the TV experience and deliver a vastly improved user experience. “It will allow you to bring your private content and apps onto the TV screen,” he said.

Fries said most people still watched TV in the living room, but that they increasingly wanted time shifted content and content accessible on multiple devices. He said that consumers wanted content to be curated rather than find content on their own. “Our job is to make it easier,” he said. “Where we’ve launched video-on-demand, 50% of people use it and they churn less.” Fries said people would still pay for good content.

Referring to the threat of over-the-top competition, Fries said that one difference between Germany and the US market was that in the US cable was expensive, allowing Netflix to compete on price, while in Germany cable services were much cheaper.