Our most significant content offerings and exclusives only really kicked in a couple of years ago
Interview with a speaker attending the IPTV Forum Asia 09 event (taking place in Hong Kong next month), we speak to Paul Berriman, Chief Technology Officer at Hong Kong telco PCCW and notable industry veteran.
Mr. Berriman has been CTO of PCCW since May 2007, having formerly been Head of Strategic Market Development for the telco, and prior to that was Senior Vice President of Strategy and Marketing. He is in charge of the Technology Strategy and Development team which is responsible for product development management, billing and operational support systems development, overall service quality, technology strategy, vision and innovation across the telecommunications and media businesses of the PCCW Group. Most recently he has led fixed and wireless projects in Hong Kong and overseas including the successful 'now TV' broadband IPTV service in Hong Kong, and PCCW’s Next Generation Network (NGN) programme and UK Broadband Wireless Project.
Having built one of the APAC region's most successful IPTV services, to what extent can PCCW's success be attributed to the technology, content and pricing of the service, and to what extent is this due to favourable market conditions?
PB: I think one of the key reasons for our success is that we got ourselves a working technology (self-developed, as very few, if any, solutions were available back in 2002 when we started….we launched now TV in 2003), deployed the technology and just got on with the job of selling content and maintaining growth momentum.
This early entry success and growth momentum was maintained by some very innovative pricing and marketing propositions. À-la-carte was a great pricing model against an incumbent cable TV company. Our innovative terms and volume discount schemes which we still retain à-la-carte ('Mini-Packs') helped us grow ARPU quickly and our specialist outbound call centres helped keep the growth momentum through their proactive and highly targeted selling. Bear in mind back in 2003 we started with only 23 channels and all the majors were exclusive to the cable company. In fact our most significant content offerings and exclusives only really kicked in a couple of years ago. For instance HBO, initially exclusive to the cable company is now exclusive with us from 2007 through to 2014 which is quite unprecedented.
It is true that the incumbent cable company did not respond as much as we had expected for a competitor, but its subscriber base had continued to grow and whilst we succeeded in wresting good content from it, it has also taken some properties back from us (e.g. PGA golf and UEFA Champions League soccer). It would be unfair to say the market conditions were all in our favour. The competition, however, has grown the market quite a lot.
After winning two categories at this year's IPTV World Series Awards last March, what have you been focused on in the past eight months or so regarding 'now TV'?
The last eight months have been spent further developing three areas - two for the short term and one for the longer term. The first two revolve around extending more content and services across the “quad-play”. We have introduced a new home multimedia device, PCCW eye2, which has an 8-inch screen with full now TV capability and Wi-Fi enabling mobility around the home. The device is particularly popular in children’s bedrooms (Disney cartoons and interactive audio storybooks), kitchens (cooking channels and interactive recipes), maid quarters and, dare I say it, bathrooms.
The other area is enhancing our home networking proposition, now that we have such an extensive presence within the home. This includes the endorsement of and support for devices such as home media centres, digital picture frames, music players and other DLNA-enabled devices. We want to help customers manage not just content coming into the home (e.g. now TV), but that going out of the home (home videos and family photos to PCs and 3G phones) as well as content being distributed around the home.
The longer-term development is to do with where we go beyond the quad-play in terms of gathering and using dynamic customer profiles to combine with static customer profiles in order to have real-time knowledge of customers so that we can offer more feature-rich services, more innovative pricing and packaging and, most importantly, prepare for a series of valuable propositions which would help us to embrace and work with the “over-the-top” Internet content providers. This will, however, take a little longer as it requires some extensive network technology and support system development
Where do you see the APAC region's IPTV industry going in the next few years? Do you think that subscriber growth will continue to escalate, or do you believe that there are serious obstacles to be overcome first?
I think the growth of broadband deployment in the region (I believe Indonesia saw the world’s fastest growth rate last year) as well as the rapid adoption of hybrid satellite and IPTV solutions to cater for non-broadband rural areas as well as urban areas, will make pay-TV businesses more viable and quicker, and will enable us to see continued growth of IPTV in the region. New regulatory changes in some of the more developed countries, such as the Korean regulator now permitting linear channels over IPTV (previously not allowed), will also see IPTV taking a more significant role in cable TV-entrenched countries. The main obstacles have always been and will continue to be the deployment of IPTV-enabling broadband and development of favourable regulatory conditions.
Do you think that this potential growth can be converted into short-term ARPU and churn-cutting benefits, or is it still very much a long-term game for most operators?
There is no doubt that pay-TV content over IPTV is a sticky product which reduces broadband churn. We have seen it catalyse our 3G mobile growth as a significant differentiator and help us develop a new product area in home multimedia devices, which rejuvenates the life of the fixed network. There are some short-term gains (broadband churn being an almost immediate benefit), but also some longer-term benefits. It is important to look at the IPTV business as an integral part of a telco’s overall performance. The standalone business case for IPTV is not so great in the short term but the overall financial benefits to the business are huge considering the value of new revenue growth, churn reduction and ability to maintain ARPU.
As bandwidth multiplies, do you think the emergence of OTT video services will have a serious effect on the success of managed-network IPTV?
It is becoming more and more obvious that OTT video cannot be a viable and sustainable business supported by advertising alone. Many OTT providers, such as Hulu, YouTube and Netflix, are either contemplating changing to or already implementing premium services where content also costs the customer. This makes them practically a pay-TV provider, just like us, except we have more to offer and more capabilities for direct local marketing and selling. If we cannot do a better job at selling pay-TV content and creating a proposition where the OTT video providers would come to us for delivery partnerships (QoS, targeted advertising, content-device repurposing, direct marketing), then we should get our just deserts!