While in most markets in western Europe - i.e., France, Italy and Spain - consolidation has taken place in recent years, among DTH operators in the Nordic markets, competition between the operators Viasat and Canal Digital is alive and well. The two operators have around 1.7 million customers between them to dominate the pay-TV landscape in the region. The interesting thing in Scandinavia is that the dynamics can change from market to market. For example, in Sweden, digital terrestrial TV (DTT) has proved very popular among households and has put the DTH players under pressure. Interestingly, both DTH platforms have different growth strategies. Canal Digital has been out of the blocks first in terms of high-definition television (HDTV) while MTG has focused more on personal video recorder (PVR) services. Both operators are stepping up their plans on other platforms, and both are looking at mobile and IP as ways to expand their revenue bases. Here, Satellite News talks to Christian Albech, CEO of Canal Digital, and Hans-Holger Albrecht, CEO of Modern Times Group (MTG), the owners of the Viasat platform, about each the prospects for DTH in the region, competition against each other, and how they believe satellite players can stay ahead of competition in all areas.
Both Viasat and Canal Digital are preparing to launch the next generation of PVR boxes into the Nordic region next year. Canal Digital launched an 80 GB PVR into the market in 2005. Albech outlined Canal Digital's plans here. He said "we will be launching a more advanced PVR box that will contain multiple tuners and will also support HDTV. The proposed launch date is planned in the first quarter of 2007. We cannot reveal the exact size of our next-generation STB. One comment I can make is that we realize how important it is to have bigger and harder disk space. The first-generation HD boxes were produced by Philips. Our strategy is to have more than one supplier and so we will have at least one more supplier on the HD side. We expect to announce the second supplier in the run-up to Christmas." Canal Digital did not reveal how many PVR subscribers it has so far.
Viasat already has around 50,000 PVR customers and also plans to launch a next-generation box into the market next year. Albrecht said "the response from customers who have taken up PVR has been extremely positive. Over 90 percent would recommend the product strongly to a friend, and the churn is very low. PVR is turning out to be one of the strongest products we have had. We knew growth was going to be slow in the beginning, followed by an acceleration, and that is exactly how it turned out. Right now, we have a 160 GB box in the market. Next year, we will probably have a 240 GB box in the market, probably in combination with MPEG4."
In HD, Canal Digital has led the way and recently launched HD packages in both Sweden and Finland, with plans to launch soon in Denmark and Norway. Albech said, "We have launched the first HD packages this year. We had already launched a premium HDTV movie channel with Canal+. We will extend the concept and that will include more channels... We already have a package in place. The question is whether it can be bigger than the one we have today. Canal Digital will use a lot of effort to follow up HDTV. It is absolutely the differentiator when it comes to competition."
While Canal Digital is adopting an aggressive approach here, Viasat is adopting very much the opposite, a wait-and-see approach, before it dives into the HD market. Albrecht commented, "HD is something we have to do, but we will probably do it next year. The other issue is whether you are going to get the connection through broadband so that you can distribute HD television via the Internet. It is quite expensive, and you have to know when you are going to get the money back through HD. With HD we think that not being first to market has been a good idea. This summer, we had about 30,000 HD-ready TVs in Sweden. If you have a 10 percent take-up, you are looking at about 3,000 [to] 4,000 customers. The technology has to be cost-effective so you can make a mass-market product out of it. Transponder costs are high. However, the situation will change."
Albrecht also believes HD needs to be integrated into other products for it to be a success. He added "you have to have HD capability through a decoder which at the same time is a PVR and also has a connection to VoD services via on-demand. Yet you cannot communicate all of those new features at the same time, because there is not enough marketing bandwidth. We think VoD will be pretty important over time. It is about choice and giving customers want they want, anytime, anywhere. The VoD services will be movies, sports, series -- things you would expect. We have everything in place to launch HD; we just have to push the button. It is not a question of 'if,' but rather a question of 'when.'"