UPC KEEPS ON BUILDING IN CENTRAL & EASTERN EUROPE

By | February 28, 2001 | Feature

The success of UPC’s Polish digital platform Wizja TV meant that it was only a matter of time before the Amsterdam-based company decided to introduce similar services in other parts of Central and Eastern Europe. They were eventually launched in Hungary, the Czech Republic and Slovakia in September 2000 and have since met with qualified success, writes Chris Dziadul.

Although there are no official subscriber figures available, industry sources believe the services – which are in each case known as UPC Direct – are currently received in 30,000 homes in Hungary, 30,000 in the Czech Republic and 10,000 in Slovakia. The DTH platform’s achievement in the Czech Republic nevertheless seems particularly impressive, given that the company had to mount a publicity campaign to introduce UPC’s brand name – which was already well known in Hungary and Slovakia – prior to the platform’s launch.

Commenting on UPC Direct’s performance in the Czech Republic, Richard Z Singer, the general director and chief operation officer of UPC Ceska Republika, told Interspace, “the results have been very good” and “on target” in terms of subscribers. Moreover, “we had almost no start-up problems, which I was initially concerned about as they could create a negative image in the market”.

Singer adds that although UPC Direct was “hampered a little” by supplies of hardware last October and November, “this was not a major factor and we have been happy with the roll out of the product”. Indeed, the company has been able to call on the services of around 400 distributors throughout the country, some of whom are official Philips outlets and others the owners of small or medium-sized independent satellite shops.

Sales, which Singer admits generally slowed down in January and February following the busy pre-Christmas period, have nevertheless been particularly strong in Prague and the surrounding region. This, in his view, is largely due to the brand identity having been easier to put in place in the capital and the fact that disposable incomes are higher there than in other parts of the country.

Yet it is arguably in the latter – especially in areas where cable penetration is minimal or even non-existent – where UPC Direct’s target audience arguably lies. Moreover, it is likely to be charged more for UPC Direct than any comparable cable package, including those provided by the UPC companies UPC Ceska Republika, Kabel Net and Dattelkabel.

At present UPC Direct offers subscribers in the Czech Republic a basic 18-19 programme package (known as Rodina, or Family) for E13.13 a month. It also offers various combinations of Rodina and up to three premium channels (HBO Czech, the proprietary Sport 1 and adult Private Gold) for a maximum of E35.08 a month.

Subscribers to UPC’s cable services, on the other hand, can receive a basic package (known as Klasic) consisting of 28-35 channels for only E11 a month. They can also receive the three premium channels (the most expensive being HBO Czech, for E8 a month) and – in the case of Dattelkabel – a high-speed Internet access service known as Mistral.

Singer nevertheless believes the issue of cost is not a problem for UPC Direct, since “over time the average income [in the Czech Republic] will continue to increase and there will be a growing percentage of people who have the financial ability to purchase the product”.

He adds that UPC Direct will be improved this summer with the inclusion of three more channels in the basic package. Although the services are unlikely to be named before the end of March, they will – in all probability – be ones “that can provide the largest amount of Czech content”. While further premium channels are also on the agenda, a final decision on them “is some way off”.

This also applies to additional services such as high-speed Internet access. Singer concedes that while tests for its provision via UPC Direct have been successful, the company still needs to address a number of business-related issues including the cost to end-users.

Yet despite this, UPC Direct has been broadly welcomed in almost all areas of the television industry in the Czech Republic – and indeed Hungary and Slovakia. Zdenek Vanicek, the head of the Czech Association of Cable Communications (CACC), feels that “what UPC are offering is a relatively cheap service. You have to take into account that cable is not popular in the Czech Republic”. This is clearly demonstrated by the fact that there are only around 800,000 connections in the country – around half the number found in Hungary, which has a comparable population.

Vanicek also hopes that UPC recognises the potential of Sport 1, since there is strong – and up until now largely unmet – demand for such a service in the Czech Republic. Indeed, the service, which is also available in Hungary and Slovakia, offers sports (such as football and ice hockey) that are extremely popular in the Czech Republic and may – in Vanicek’s view – eventually overtake Eurosport to become the country’s most successful sports channel.

The launch of UPC Direct has also been welcomed by a growing number of foreign programmers who have, up until now, relied almost exclusively on cable distribution in the Czech Republic. Although some – including Zone Vision (Reality TV and Romantica) and Fox Kids – now offer fully or partly localised services, others may be persuaded to do so by the increased coverage UPC Direct will offer them.

Industry sources believe that UPC Direct aims to have up to 70,000 subscribers in the Czech Republic by the end of the year, while in Hungary – despite competition from the recently re-launched subscription service Antenna Mikro in Budapest – the figure is likely to be even higher. UPC Direct will also probably be looking for a better performance over the coming months in Slovakia, where up to 60 per cent of the population is rural and therefore a primary target for the service.

Evidence of the platform’s solid performance is provided by Dirk Ludders, the director of Budapest-based Strong CEE. In his view, UPC Direct has not only recorded impressive sales across the region but also done much to boost the DTH market in general.


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