TPS’ HITS ‘MAGIC MILLION’ MARK

Television Par Satelite (TPS) is France’s ‘other’ digital direct-to-home (DTH) satellite pay-TV system. While rival Canal Plus boasts a total 6.7 million French subscribers, TPS achieved its first million in December 2000, writes Chris Forrester.

But this progress is not so sluggish as first appears because Canal Plus’ digital satellite numbers stand at just 1.48 million (around 3 million remain firmly rooted in the solitary Canal Plus terrestrial analogue channel), and in fact TPS’ development has significantly outstripped its original forecasts.

When it launched in December 1996 the target was to hit 700,000 subscribers within four years. TPS’ director of programming Guillaume de Posch admits TPS still has “lots to do in getting to its next target which is 1.5 million homes by about 2003”. TPS is not yet profitable, but de Posch says the business plan for breakeven is expected at 1.4 million subscribers, “which we forecast to be at Q4/2002 or Q1/2003”.

Alexander Gruca, a senior analyst at investment bankers Morgan Stanley Dean Witter, says TPS is taking a steady 50 per cent of net additions in the overall French satellite market, and praises TPS’ aggressive pursuit of new channels, in particular projects like TF6, a new youth-orientated channel from TPS partners TF1 and M6, saying, “We see this as positive, as we can expect faster and greater profits in digital TV.”

TPS’ achievements are many, not least having a bouquet which through a single remote control accesses 160 channels, including the only digital version of all the French national general entertainment networks, four film channels, 30 thematic channels and 78 international channels, listen to 47 radio stations and use 40 interactive services.

Those interactive services, says de Posch, are key. “For example, we consider an absolute killer app to be the horse race on-screen betting application that we introduced in mid November and is growing astonishingly fast. It is viewer friendly, we have more than 6,000 accounts in two weeks and we expect to hit 15,000 accounts.” He predicts interactivity and tele-shopping to quickly grow to 3-4 per cent of TPS’ income.

The spread of interactive services is impressive. TPS claims to be a “world forerunner” in interactive TV with interactive services such as home banking, video games, news, online stock market transactions, a virtual shopping mall with one-to-one marketing and classifieds. TPS is also the only TV service in France to offer all its subscribers the possibility of sending and receiving e-mail via their television sets.

But there is a dark cloud on TPS’ horizon – and it’s not Canal Plus. “It is the whole concept of digital terrestrial TV (DTT) which we see as a major threat to accelerating our subs numbers,” says de Posch. However, he admits DTT could also be an opportunity. “The answer is totally linked to the way they [French broadcasting authority] will allocate the multiplexes. The bidding process here is quite the opposite to the way it was handled in the UK, and speaking personally, the UK method was much more efficient with commercial operators chosen and then allowed to build their product offerings.

“Here, under the umbrella of so-called pluralism, an important word in France, the CSA has the authority to choose what channels are included, and afterwards these channels have to convene together to try and form an offer.”

This beauty contest, for TPS, is a major issue and they are not yet sure what role should be played as a channel operator. “It could give us an opportunity to place our own premium channels onto DTT,” he adds, “Helping us amortise our fixed costs and in particular programming costs. But we will not know much before mid 2001 how the final procedure is decided. And of course Canal Plus will also be pitching just as hard.”

The French dilemma is that some of TPS’ shareholders also have public broadcasting obligations and would want to be part of any DTT scheme that emerges, possibly placing them in direct competition to the satellite platform – which TPS (and probably Canal Plus) could be excluded from, with the exception of some premium channel action.

De Posch says the public broadcasting lobby has a strong voice in France. “Whether the government will support their plans financially is another question, although the minister of finance is supposed to allocate certain funds. But for TPS we think it would be absurd [for government] to go on funding pub-caster channels purely for DTT. We are already subsidising many such channels. And for example, we in France are now in much the same position as Sky in the UK where new channels joining our bouquet receive nothing, or very little, in terms of subscription income.”

As for immediate development, de Posch says a new set-top box will be issued. “The key phrase for us is time to market. We have prototypes of hard drive boxes, and Canal Plus’ had made announcements that they would launch their new box at the end of 2000 but we have heard that will slip to nearer the end of 2001. Typically, with such a heavy decision as this we will wait to see what they do. There’s another element. Technology is moving so very fast that we do not want to be in a position where we specify something today only for the technology to not only move on in a few months, but where the improvement would cost about the same.”