Broadcast 2.0: The Changing Scene in Europe - Page 1 of 4

The European broadcast landscape is a hotbed of innovation as operators and broadcasters rollout different strategies to attract customers. With telcos moving into the broadcast sector and high-definition offerings becoming more widespread, the landscape has changed throughout the last few years. What impact will these changes have on satellite players and the broadcasting market overall?

Modern consumers expect greater flexibility in their viewing habits, and broadcasters must respond by making content available practically anytime and for a variety of different platforms. Does this desire for greater flexibility play into the hands of satellite companies, or is satellite’s future in this new broadcast dynamic now more open to question than ever?

HDTV, IPTV Reshaping Market

There is little doubt that high-definition TV (HDTV( and IPTV are the two main trends impacting the TV broadcasting market, particularly in Europe. "After a very slow start between 2005 and 2007, HDTV is now set to soar, and this is on all broadcasting networks, including" digital terrestrial television, says Stéphanie Villaret, a satellite analyst at French media consultancy Idate. "HD is now developing rapidly and has a chance to become the next broadcasting standard. There were 50 HD channels broadcast in Europe in 2007, and we expect another 200 channels before 2013, all of them are broadcast over satellite networks.

"IPTV is gaining some market share, especially in Western Europe," she says. "We estimate that IPTV market shares reached up to 10 percent of TV households in countries such as France and over 6 percent in Italy and 4 percent in Spain at the end 2007. The quick development of IPTV in these countries is mainly based on ISPs’ low-cost triple-play strategy. The increasing number of multichannel IPTV households represents a threat for satellite operators’ growth."

But Nick Thompson, managing director at Arqiva’s satellite media solutions division, sees these trends as good news for the satellite sector, even though telcos entering the TV space could be viewed as a competitive threat. "Cable and IPTV are not necessarily threats to satellite," he says. "In fact, they create quite high demand for distribution services themselves. Additionally, IPTV works best in a hybrid format. For example, you would use broadband to receive some content and satellite to receive other, such as live channels. As a result, it actually partly fuels the growth of satellite. We believe that satellite players do still have competitive advantage, primarily because the incremental cost for a viewer is always less compared to that of cable and IPTV. Furthermore, there is more capacity readily available and it is a lot quicker to deploy a satellite platform than it is a cable or IPTV platform," he says.

"Consumers are now demanding broadcasting services, anywhere, anytime and anyhow," says Cato Halsaa, CEO of Telenor Satellite Broadcasting. "Multiple platforms make it harder to retain market share for any one operator. Key differentiators include content and premium services like HDTV (high-definition), and we are seeing many DTH (direct-to-home) platforms launching a variety of new channels to keep up their market share. The ubiquity of satellite provides technical advantages in covering large areas with fixed capital expenditure as well as the ability to provide bandwidth intensive services like HD. Cable operators and IPTV operators now seem to be following this new trend of starting up combined DTH platforms with headends in the sky. This, therefore, leads the way to more growth in satellite platforms, however, probably not at the same pace we have seen in the past two years. It must not be forgotten that satellite plays a role in transmitting content of both IPTV and cable services via cable headends in the sky."

While satellite players such as Arqiva and Telenor believe there are opportunities for them to help a wide variety of operators deliver content, what are the opportunities for satellite TV operators what does this new landscape mean for other satellite operators that now have telcos, cable and other players competing against them? "There is certainly a realization that the world of television is now more competitive than it was before, and this is driving the satellite operators to launch new differentiated services like HDTV and" personal video recorders, says Roger Bolton, vice president of business development at Tandberg Television. "We have seen that most of the satellite operators have been able to increase their numbers of subscribers in line with their published plans. Certainly, that’s true of BSkyB, Sky Italia and Canalsat, so I don’t think they have been impacted by the launch of IPTV yet. But that’s not to say they won’t in the future and they need to stay ahead in service provision."

"Multiple platforms make it harder to retain market share... and we are seeing many DTH platforms launching a variety of new channels to keep up their market share"

— Halsaa, Telenor Satellite Broadcasting

Telcos with next generation networks and flush with cash are entering into this space with triple-play offerings as a way of gaining a competitive advantage over satellite operators, but have decided to fight fire with fire. Nowhere is this more evident than in the United Kingdom, where BSkyB obtained terrestrial broadband infrastructure through its acquisition of Easynet and now is a strong player in the telephony and broadband markets. "We have benefited from having our own telecoms infrastructure because it has given us the ability to offer very fast high-quality broadband to our customer base and be very flexible with the pricing we are able to offer customers," says Steve Nuttall, director of the commercial group at BSkyB. "We are very fortunate that the network that we bought is effectively a 21st-century network. That gives a lot of advantages in the types of things we are able to do but also the cost of actually operating it. By owning the infrastructure, we are not dependent on a wholesale product from other people."

Adding the terrestrial infrastructure to its delivery networks means BSkyB can be more creative than most satellite players when it comes to providing content, says Nuttall. "The next stage is using the infrastructure to deliver content and services that delight consumers," he says. "In the future, when our [set-top boxes] connect into broadband, people will be able to pull content over a broadband network into them as well as have content delivered over broadcast for either live viewing or local storage later. Broadband comes a very important pipe for the delivery of content. We think there will be large demand for live programming and HD programming on a one-to-many basis. Satellite is very cost-effective, very flexible, very fast to deploy in that way. In addition, for less popular content and communications needs, a one-to-one personal broadband connection is very valuable. We think we have both means of delivery in a structure that is very fast and flexible and which is well aligned with what consumers we need."