Multiscreen for the masses – assessing TV Everywhere in Europe

Multiscreen services are becoming ever more commonplace, as pay TV subscribers expect to be able to watch content at their convenience. As operators continue to experiment with business models, Graham Pomphrey examines the European TV Everywhere market.

Whether they like it or not, pay TV operators are waking up to the fact that subscribers want to be in control of how they watch their content. It is official: pay TV has gone multiscreen.

Barely a day goes by without news of another TV Everywhere deployment or a new multiscreen content deal. In developed markets, increasing broadband access, the proliferation of connected devices, competition amongst pay TV operators and increasingly tech-savvy consumers have created a perfect storm and service providers have had to act quickly. As Telenet’s multiscreen project leader Jerry Hamal points out, TV Everywhere services should be seen as a commodity, something that forms part of an overall digital TV offering.

Recent research certainly backs his claim. Almost half of all devices that receive TV services from the largest global pay TV service providers by 2015 will be PCs, smartphones, tablets and other multiscreen devices, according to IHS Screen Digest. It predicts that the top 43 global pay TV operators will supply TV services to 310 million active multiscreen devices by 2015, compared with 322 million set-top boxes.

The global set-top box base from multiscreen operators is expected to grow by 17% between 2011 and 2015, compared with 400% growth for multiscreen devices receiving pay TV services.

Business models

For the time being, pay TV operators are still grappling with business models for multiscreen services. The investment required to deliver content to multiple screens is certainly not insignificant; from additional server costs, to re-negotiating content rights, ramping up marketing activity and recruiting new members of staff, it all adds up. Conversely, asking people to pay again for a service that is already being taken on the main TV is a challenge.

“The happier our customers are, the more likely they are to stay with Sky, so the business benefits are clear.” Holly Knill, BSkyB

Take Telenet, one of the first European service providers to launch a fully-fledged multiscreen offering. Its Yelo service, which is available on computers as well as smartphones and tablets running the iOS and Android operating systems, has been on offer since the start of 2010. It is only available to Telenet TV and broadband customers, at no additional charge, with content available to a Yelo user, mirroring the TV package they subscribe to, whether live channels or on-demand services. Sporting Telenet subscribers can access live football matches via Yelo for example.

According to Hamal, developing Yelo was an important step in order to stand out in a crowded communications market. The company wanted to be seen as a technology leader in a country with plenty of broadband and TV competition, and an increasing penetration of internet-connected devices.

“When we launched Yelo 18 months ago, a lot of people had iPads and iPhones. At the same time, we were aware that our customers knew how much content we offered but didn’t have the time to watch it all in front of the TV – it was simply a case of how quickly we could launch Yelo,” he says.

Yelo launched initially on iPhones and iPads, moving later to PCs. Earlier this year, Telenet launched a Yelo app for Android devices following customer demand, and at the same time boosted the number of channels available on the service to 31. The service includes a two-week EPG and access to VOD as well as remote  DVR programming from other devices.

Hamal is convinced that launching early has meant that Yelo is now a recognised brand in its own right, even amongst non-Telenet customers. It is hoped that this could attract new customers to Telenet. “Yelo is a year and a half old and we have lots of users and a strong brand that is known throughout Belgium. A lot of people are talking about Yelo. It’s something that our customers really like and it could convince others to come to Telenet,” he says.

Yelo is also confined to Telenet’s broadband network, so customers can only use the service in conjunction with a Telenet broadband offering. While Hamal says that the majority of usage occurs within the home, being tied to Telenet’s network could cause problems when users try to connect to the service outside their home network. However, Hamal points out that the operator has negotiated with content rights holders to be able to offer programming via its hotspot network, which is available in over 1,200 locations. It has also rolled out around 500,000 so called ‘home spots’, where Telenet customer’s broadband access networks are turned into WiFi hot spots that can be used by other customers. “It’s a challenge to let people watch TV outside the home, but usage is still driven within the home,” says Hamal.

The operator currently has no plans to open the service up to non-Telenet subscribers. “We now see Yelo as part of our overall digital TV experience and our customers see it as a basic service – it’s like a commodity,” says Hamal.

Open to all

Unlike Telenet’s policy of keeping Yelo exclusive to its wider customer base, Swiss telco Swisscom’s TV Everywhere service is open to all.

Swisscom TV Air launched in its current guise at the start of 2010, replacing the telco’s DVB-H mobile TV service Swisscom TV Mobile.  For CHF9 (?7.50) per month, users have access to over 60 channels on Android and iOS devices. Various sporting events are also made available for CHF5.50 each, while a selection of over 500 movies on-demand are also on offer from CHF3.50 each. The service is available to anyone, so users do not need to take any other services from the telco to receive Swisscom TV Air.

Despite the service’s potential to generate new revenues, Swisscom primarily sees its multiscreen offering as a way to differentiate its TV platform from rival operators, to showcase its content and to increase loyalty amongst its customers.

“Increased revenues come from attracting new customers,” says Markus Gisi, head of TV services at Swisscom. “Swisscom TV Air, is an OTT service and therefore accessible to everybody in Switzerland. This helps us to show potential customers our wide range of live and exclusive on-demand TV content and gives us up-selling potential for our TV subscriptions.”

Gisi says the growing popularity of on-demand services confirmed a trend towards individualised TV consumption. It was this shift in viewing habits that led to the development of a full multiscreen offering. “Today, customers want to be independent in every sphere of life. Therefore they need to be able watch live and on-demand TV content wherever they are, whenever they want. In order to satisfy these needs and to differentiate our TV service by taking advantage of our assets such as network capacity, content rights and customer relationship, we decided to offer a high-quality multiscreen TV service very early,” he says.

Gisi stresses the importance of continually developing Swisscom’s TV Everywhere service to keep it fresh and to ensure users get the best possible experience, even if it means making significant technology upgrades. One of the latest features Swisscom has introduced to the TV Air service is a converged recording option that enables customers to watch content recorded via the DVR on connected devices, a move that requires recorded content to be stored in the cloud. For this, the operator partnered with Alcatel-Lucent. “It’s very important to regularly offer new services. Our newest feature is the converged recording function. It frees our customers from the limitations of set-top boxes and allows them to consume their recorded video content on any connected device such as tablets, mobile phones or PCs,” says Gisi.

The key to success for multiscreen services, surmises Gisi, is to align customers’ experiences across all devices, while ensuring excellent usability and service quality. “Only if you can meet all of these customers needs – content, quality and usability – is it possible to have long-term success,” he says.

Multiple models

BSkyB, the UK’s leading pay TV operator, has made its boldest move in multiscreen services to-date by launching a new platform, Now TV, that offers it premium content on a range of connected TV devices without requiring customers to subscribe to a set-top delivered service. The launch means Sky is now offering two distinct multiscreen offerings – Sky Go, which is regarded by the operator as a value-added offering that delivers a range of content on various to existing customers at no extra charge, and Now TV. According to Holly Knill, head of Sky Go, both platforms enable Sky to showcase the £2.3 billion (?3) it spends each year on content to as wide an audience as possible, through various business models.

In the case of Sky Go, which launched last year, the service is designed to give Sky’s DTH customers added flexibility over where and when they can access their subscriptions. “Research shows that our customers really appreciate this flexible access to content, and the happier our customers are, the more likely they are to stay with Sky, so the business benefits are clear,” says Knill.

Unlike Now TV, which will eventually replicate much of the programming offered on Sky’s full TV platform, including movies, sports and entertainment shows, Sky Go users also have access to Sky’s premium services including DVR platform Sky Plus via their main subscription. “Content wise, in time, Now TV will add content alongside Sky Movies that will bring it in line with what’s offered through Sky,” says Knill. “But they are aimed at completely different segments.”

Interestingly, while Sky Go has proved very popular, attracting millions of users within its first year, live viewing on Sky’s main platform has remained at record levels. “Roughly four hours a day,” says Knill. “That suggests that the greater availability of on-demand and flexible viewing doesn’t actually, in practice, chip away at traditional live audiences, but actually grows overall consumption.”

Following on from the success of Sky Go, Now TV is launching in a fairly saturated pay TV market. In Sky’s case, the recent achievement of passing the 10 million-subscriber mark came as pay TV growth slowed. The final quarter of 2011 was the first ever Christmas period that the operator didn’t deliver the highest quarterly customer additions for the year. The seasoned operator is banking on Now TV to attract some of the 13 million UK households that do not currently subscribe to a TV service.

The multiscreen service has launched with a movie offering enabling users to watch an unlimited number of movies for £15 per month, or to buy titles on an individual basis for between £0.99 to £3.49. The move is perhaps the biggest shift for Sky in its 22-year history, having focussed its efforts on the traditional pay TV model of tying customers down to fixed-term contracts and hoping to upsell to them.

The risk with Now TV is that existing DTH customers will churn to Now TV, thereby reducing the amount of money, overall, that they hand over to Sky. Now TV’s director, Simon Creasey, however, is confident that it will appeal to a completely different type of viewer than the main Sky service. “Now TV will appeal to a brand new audience. There are 13 million homes in the UK that get their content without engaging with a pay TV operator. This is about offering them instant access to content without having to make a commitment,” he says. “Then there are the 10.5 million [Sky DTH] households that are very happy with their service, and with extra services like Sky Plus and Sky 3D.”

Sky clearly has the edge in terms of content, and marketing weight, but it will be competing with other OTT players that charge much less, including Netflix, which charges £5.99 to UK customers for unlimited content.

Competition

Sky is hoping to offer Now TV across as many devices as possible. The company’s Sky Go platform, and before that Sky by Broadband, has given the operator a taste for the kinds of services and content people want to watch, and the devices that they want to view it on. From launch Now TV was available on Android smartohones, PCs and Mac computers, with iPhones, iPads, Xbox consoles and the UK’s new connected TV and DTT platform YouView set to follow. Talks are also underway for distribution on PS3 and Roku devices, and Creasey says the service is likely to launch directly to connected TVs in the future.

In eastern Europe, where pay TV markets are generally less developed that their western counterparts, competition can be rife, with numerous operators vying for a new wave of digital TV customers. Mutliscreen services are being used to stand out from the crowd, and some operators, including Croatia’s B.net, have already rolled out TV Everywhere services.

The cable operator launched a multiscreen service last year that enables users to watch 13 TV channels on smartphones and tablets. The B.net TV Za Van service is available at no extra charge to all B.net TV subscribers via a downloadable app. “There is hard competition in the [Croatian] market. It’s a market with 1.5 million households, three DTH operators, cable operators, five or six IPTV operators and OTT operators,” explains Adrian Jezina, board member of Vipnet and CEO of cable operator B.net “The environment is not big enough to swallow all of that.”

Last year, mobile telco Vipnet acquired B.net and Jezina believes the merger provides a prime opportunity to offer multiscreen services, something that will hopefully differentiate it from other pay TV services. It is also a natural business progression considering mobile and fixed line ARPU is in decline, while broadband and pay TV revenues are increasing, he ads.

“We are definitely going in the direction of multiscreen,” says Jezina. “B.net merged with Vipnet so we have a huge platform of customers and we want to provide good content wherever you are on whatever device you want. Plus, with our current digital base we are trying to increase APRU and provide a better experience to give more to the customers. We are adding OTT so they can see their favourite content when they want it.”

B.net is currently in the process of migrating its cable TV and OTT services onto a common platform based on Zappware’s technology, and it is aiming to add more interactive functions later this year.  The upgrade will bring the regular cable TV and OTT services together on a single platform and is designed to give a consistent experience across both.

In a sign of just how competitive the Croatian pay TV market is, telco T-Hrvatski Telekom has also launched a multicreen offering. MAXtv To Go is currently restricted to T-HT’s broadband and mobile networks, a decision that was based on technological limitations rather than business reasons. “The MAXtv to Go service was designed so that it can be used by all our existing customers. In the initial phase, it was available only to those who already used one of T-HT’s services because of technical reasons. However, the service will also be offered to those who do not take any of our services,” a spokesperson said.

The telco says changes in viewing habits amongst its customers are very evident, with its IPTV-delivered Snimalica DVR and Videoteka video-on-demand services proving particularly popular. The company is trying to replicate this level of interactivity across multiple screens. “It is this interactivity, together with content exclusiveness, that represents our competitive advantage. Users expect the same on other screens. Our initial idea is to offer to users the same, or as similar experience as possible, on all screens. What with different technologies, rights and other issues it is not always possible to offer the identical service, but from a strategic perspective we strive to have a consistent approach across all screens,” the company says.

New players

While some established, traditional pay TV players have made the move to multiscreen as a competitive tactic against rival pay TV operators, they have also been spooked by the emergence of pure OTT operators. OTT video services that have started with a proposition that doesn’t require access to a set-top box connected to a TV are well placed to deliver a full multiscreen service.

Freed from the constraints of legacy infrastructure and internal systems geared towards broadcast delivery, some OTT operators have managed to get a foothold in multiscreen delivery ahead of pay TV operators. One of them is Scandinavian video service Voddler, which launched in 2010 and now offers content from around 25 partners, including the major film studios, to over one million users in Sweden, Norway, Denmark, Finland and, most recently, Spain.

For Voddler’s vice-president of communications Anders Sjöman, the most important thing for a new OTT entrant is to launch ahead of pay TV operators. “We got there first, which hopefully gives us consumer recognition. If the bigger brands aren’t in the multiscreen space, customers will look elsewhere. Bigger players have more financial muscle and can buy more content, but hopefully we have established ourselves already.”

When Voddler launched its OTT service, it initially targeted PCs, which, according to Sjöman, made it easier to strike content deals, thanks to the security levels offered by such platforms. It is now available on various connected devices, including smartphones and tablets, with content from around 25 partners including some of the majors.

Aside from launching early, Voddler’s main USP is the Quality of Service it says it can guarantee to its users, something Sjöman says others struggle with. A ‘best effort’ approach is unlikely to be tolerated by subscribers, especially if they are paying a premium to receive content, he says.

The technology behind Voddler is unique to the company and aims to avoid internet bottlenecks by using a kind of peer-to-peer approach to distributing video. “The way things are streamed at the moment consists of a brute-force push from a CDN. Either you are an Amazon and have built your own CDN or you source one from someone else. If one of those CDNs goes down it’s a big problem, he says. As it stands, there is no sense of a built-in Quality of Service assurance – you can’t even pay for it. If a packet gets lost along the way, you have to live with it. Sending large video files becomes a problem.” The VoddlerNet is a distribution network that uses end users’ storage and bandwidth, creating a decentralised network, with devices effectively acting as small edge servers. This way, content is stored in a large virtual distributed hard drive, meaning that distribution and hosting capacity grows with every new consumer device that connects to the network. “VoddlerNet distributes content from the last person that viewed that movie and is closest to you. You don’t have to depend on a central server. It means we can offer Quality of Service, and we save a load of data for the ISPs,” says Sjöman.

Multiscreen services in Europe are certainly starting to proliferate, but there is a feeling that operators are still grappling with exactly how it fits into their business aims. Customers are starting to show a real appetite and to some extent have forced the hand of their service providers.

Whether TV Everywhere will generate significant revenues in its own right remains to be seen, but as with other pay TV innovations, like DVR and high-definition, it is increasingly becoming a necessary business move for operators.