The Football Feeding Frenzy, or does pay TV need premium content to survive?

By Jeffrey Soong, CEO of BNS Ltd

It appears that the debate about success of new media platforms, particularly in Asia, has recently been dominated by one topic: premium content, and in particular, the English Premier League.

A number of recent announcements illustrate the near feeding frenzy premium football deals are triggering here. Take Chinese soccer broadcaster WinTV, who earlier this year forked out RMB 378 million to secure the right to broadcast English Premier League matches on digital TV in China from 2007 to 2010, only to on-sell the secondary broadcast rights to Chinese online platforms.

For their part, the Premier League, slick marketing organisation that it is, is not missing a beat and is slicing and dicing its programs and selling the rights to broadband and mobile platforms in ever more creative packages.
But with all the attention accorded to premium sports, the question beckons whether securing premium content, sports or otherwise, will be the right strategy for telcos moving forward, particularly in Asia, where price points are sensitive and cable TV dominance in some markets hampers the roll out of IPTV services.
Just recently, Ovum has warned that competition for premium content could further drive up content acquisition costs and stymie IPTV's success, at least for multichannel service models.
So just how important is premium content for launching and maintaining a successful service? 
There is no doubt that football and other premium content will always play an important role for pay TV operations – ask iCable who have recently announced a 14% drop in revenues which is widely seen in direct correlation to Now Broadband TV poaching of English Premier League football and other premium sports content. 

And in the wake of SingTel launching its MioTV IPTV service in July, reports and opinion pieces were monopolised by the question whether it was possible to launch and establish a successful pay TV service in general, and IPTV in particular, without securing premium sports content. 

Well, the simple answer is: you can. As tempting as it may be to label premium content as the single most important ingredient that will make or break a service, there are a number of factors which are equally, if not more important.
Frost & Sullivan recently stated that premium content was “definitely not the single component of an IPTV offering that will determine the success, or failure, of television over IP” but suggested it was the user experience that would determine its success.
While F&S based its observations on deployments in Europe, a quick look closer to home here in Asia seems to support this view. One of the best examples is no other than the nowadays premium sports-heavy Now Broadband TV. When Now TV launched in 2003, the service was able to sign up close to 200,000 subscribers within four months of launching, and crucially, without premium sports content. This was then and still is a tremendous achievement considering that it took local cable rival iCable, who held the EPL rights at the time, almost 10 years to reach similar subscriber numbers.
So what did Now TV do right? In a nutshell, the company’s early success can be attributed to operational and management excellence combined with a favourable market environment and the right timing. These may be rather boring attributes compared to exclusive football rights, but as it turned out they prove to be far more important and effective.

It ain’t what you do...

Of course PCCW has had a natural head start in terms of learning from previous mistakes after its failed attempt at launching video services in the late nineties. But one of the main success factors for Now TV in it’s second foray into video services was pinpointing inflexible pricing and service plans as iCable’s major weakness and attacking it with an a la carte pricing strategy and “mini packs” which lowered the entry barrier for subscribers and can only be implemented effectively on an IP-based network. A sensible content evolution strategy that was in line with customers’ needs completed what you could probably call a text book launch strategy for a pay TV service in a low penetration pay TV market like Hong Kong.

The SingTel case illustrates another important aspect that may be more important than exclusive sports deals. Singapore is a culturally diverse market that has plenty of room for a more varied mix of content than had been traditionally available from its sole pay TV platform StarHub. So for SingTel’s MioTV, effectively meeting the culturally diverse content requirements of the Singapore market as well as execution excellence, flexible and competitive pricing and freedom of choice are likely to be far more crucial to the level of initial success than EPL or other premium content.

Conversely, StarHub’s future success with its hard fought for Premier League football rights will not be based upon the popularity of the football itself, but the fact that the programs are offered in an innovative way with maximum flexibility across cable TV, online and mobile platforms.

So while it is probably safe to say that premium content will continue to be important for years to come, to echo Frost & Sullivan, a holistic end user experience will be the real "king" in IPTV land, not content.

Or in other words: it ain’t what you do, it’s the way that you do it (and that's what gets results).

Hong Kong-based BNS Ltd supplies IPTV and IP-based content and technology solutions to operators across Asia, and its operator clients include Hanaro Telecom, Telekom Malaysia, PCCW, True and many others.