TPS’ Progress In The Interactive Arena

TPS (La Télévision Par Satellite), the number two French satellite player, predicts it will break through the 100 million euros ($87.6 million) barrier for interactive services this year. Alain Staron, head of interactive services at TPS, told Interspace after giving a presentation at the Milia show in Cannes: “You have to remember that interactive TV comes after pay TV. Interactive revenues grew 30 percent in 2001. We want to make interactive TV media independent from TV operators. We want to derive 30 percent greater revenues than last year. We generated gross revenues of 76 million euros ($66.6 million) last year. Net revenues will be 10-15 percent of this.”

TPS now has around 1.1 million subscribers in the French market. It started the launch of interactive services at the end of 1996 and has long been regarded as one of the pioneers in terms of interactive services in Europe. It now has around 300 interactive services available. Around 90 percent of its subscribers have used interactive services and around 50 percent of them use interactive services at least once a week. Almost 40 percent of its subscriber base have played games on the system. Over 30 million euros ($26.3 million) were placed in interactive betting in 2001. It has also launched a TV mail service, which enables users to send and receive e-mails through the TV. So far it has seen a weekly average of 10,000 e-mails being sent and received via TV.

Staron boasts that TPS is the leading French operator in terms of interactive services. “The usage of interactive service is 10-15 percent better than Canal Satellite. We are also cheaper than Canal Satellite,” he says.

While these statistics are encouraging, interactive TV remains a small part of the overall revenue mix for TPS. “Interactive TV does not sell subscriptions. The impact of interactive services is to significantly reduce churn, but it does not aid in the recruitment of customers. There is an influence. We are now at the point where we can make interactive TV a reality in the mind of people that do not use it. Once this is done, then it can become a selling argument,” Staron says.

The picture is not all bright though. While revenues and usage figures for interactive services showed impressive growth, generating revenues from “TV-commerce” proved difficult. Staron conceded that TPS had suffered with a number of bankruptcies from virtual shops in 2001. The recession in the advertising arena was also a problem in 2001. Yet, the potential for advertising revenues remains high. TPS had more than 20 million visits per month for its interactive services and has already run a number of successful campaigns for advertisers such as Compaq.

TPS gets its revenues in the interactive arena from six areas. It derives 24 percent of its revenues from advertising, 9 percent from direct marketing, 22 percent from home banking and related services, 12 percent from transactional services, 15 percent from subscriptions and 18 percent from premium rate telephony.

TPS saw average monthly revenue per unit (ARPU) for its interactive services reach 10 euros ($8.7) in 2001. The company expects to grow this figure by 30 percent in 2002. It is launching a number of new services and TPS subscribers will be able to send e-mail to candidates in the French presidential elections this year.

TPS, however, will not do a wholesale upgrade of set-top boxes. Staron admitted there were major problems due “to the hacking phenomenon.” He added: “If you put boxes out in the retail market, the more open they are to hackers. With your own boxes, it is easier to come up with counter measures to stop people illegally watching TPS satellite. For boxes we own this is easy.” The cost of such a wholesale upgrade would be prohibitive, says Staron.

The main challenge ahead for Staron and TPS is to make interactive services a key revenue generator going forward. The statistics indicate that most its subscriber base is prepared to use interactive services, yet these services remain more of a value-add than a key differentiator. TPS hopes it can maintain its robust growth and continue its strong performance in the French market.

–Mark Holmes