Canal+ Cyfrowy COO Confirms Push VOD Plans

Jacques Aymar de Roquefeuil

[23/08/07 – Satellite News] Canal+ Cyfrowy, one of the more progressive direct-to-home (DTH) operators in Eastern Europe, had a banner year in 2006 adding nearly 250,000 new subscribers to bring its total to around 950,000 customers in Poland.

Jacques Aymar de Roquefeuil, Canal+ Cyfrowy’s COO, said he was “surprised” at the company’s performance considering competition in the market increased during the year with new DTH operator N joining Polsat in the market. “Everyone was thinking more about digital TV, and we have benefited from all this communication because we have the best content,” he said. “The sales so far this year have been even better than last year. We are quite optimistic even if the market is crazy with three competitors.”

Canal+ Cyfrowy has high hopes that it high-definition, launched in December, will help it grow its market share. In 2007, Canal+ had added Canal+ Film HD and National Geographic Channel HD to go along with Canal+ Sport HD. The challenge now for the operator is to boost the amount of HD content available. “We have our first HD van and we will broadcast all the Polish league soccer in HD ourselves,” de Roquefeuil said. “That is completely new for this market. We will also do speedway, which is very popular in Poland, in HD ourselves. We will also have more movies in HD as we have a good relationship with the studios.”

But de Roquefeuil admits it is “quite difficult” to assess what impact HD services may have. “There are not many households which have an HD-ready TV,” he said. “Last December, there was approximately 3 percent of Polish households equipped with HD-ready TV sets. In our subscriber group it is 7 percent now. … With the launch of the two additional channels we expect the number to grow faster now. We are quite optimistic with these figures even if we know HD will not see quick success the way it has in France or the [United Kingdom] Here it will take time, but it will work.”

Canal+ Cyfrowy also plans to bring an upgraded set-top box to the Polish market that can record HD programming and will allow the operator to launch video-on-demand (V0D) services before the end of 2007. “We will offer different pricing models,” de Roquefeuil said. “It will be possible to buy and rent the box, but at the moment, the commercial policy is not completely defined. … It is difficult to say what the take-up would be in the first 12 months, but we would hope for at least 50,000 subscribers for a start.”

The VOD plans are in direct response to similar plans by N, which has shaken up a market for Polsat and Canal+ Cyfrowy, said de Roquefeuil. “The main impact of N has been on the pricing side,” he said. “They have launched new packages at a very low price. The first consequence was for Polsat to create a package at 2.50 euros ($3.37) a month. How can you be profitable with such a package? … As you can imagine, the more competitive the market the higher prices for the TV rights. Also the sales and distribution network market has become more competitive. We also need to make more marketing communication and have more promotions to compete. It happened at the wrong moment, as with the economy growing, people were prepared to pay more money for a pay-TV subscription.”

de Roquefeuil believes it is “impossible” for the market to sustain three players, and hints that Canal+ Cyfrowy could acquire one of its rivals. “We are the leaders in terms of profitability. What we saw everywhere in Europe is that it is always the most profitable platforms that buy up the other platforms, but for the moment there is no discussion about any mergers,” he said.

Long-Term Plans

Canal+ Cyfrowy also hopes establish a role for itself in the Internet Protocol (IP) TV market in Poland as a complement to its DTH operations. The company has linked up with leading Polish telco TPSA, but de Roquefeuil admits IPTV has not performed very well so far in Poland. “We closed the deal last year with TPSA but it has not gone particularly well so far as TPSA was not completely ready,” he said. They have had IT problems and they will change completely their system this summer. They plan to have a relaunch between September and November this year. It is really a pity because we have lost one year.”

Despite the teething problems, de Roquefeuil believes that IPTV can be a success in Poland. “The DSL service is complementary to our DTH offering,” he said. “It is an alternative distribution channel for us, but the offer remains exactly the same and, what is important, subscribers via TPSA would also be our subscribers. They will get two invoices, one from TPSA for phone and Internet and one from us for TV.”

Canal+ Cyfrowy also is extending its reach into the mobile TV space, working on a trial with mobile operator Orange. “We have started to broadcast some of our channels on their network with strong success, particularly the kids channel, which is the most successful,” de Roquefeuil said. “Now we have to work on the business model with Orange. We will have a meeting quite soon on this. … I don’t expect mobile TV to be particularly strong in the beginning, but there is no reason why it cannot be as successful in Poland as it is in other markets.”