Cable and Satellite Operators Offer Mobile TV Apps to Subscribers

Cable and Satellite Operators Offer Mobile TV Apps to Subscribers

Brazilian pay-tv programmer Globosat currently has over 500,000 active users for its six video-on-demand (VoD) over-the-top (OTT) products, which can be viewed over the web or via apps for iOS and Android smartphones and tablets. Two of the products are free, and another four are subscription-based. The company anticipates 1.5 million users by the end of the year, and versions for the Xbox and Windows Phone will soon be available.

Tarifica’s Take

Increasingly, cable and satellite providers like Globosat are enabling their subscribers to access content while away from home, via mobile devices. This is accomplished via an OTT approach, through which their subscribers typically receive a free app that rides on the mobile operator’s network and provides access to most, if not all, of the programming the cable or satellite subscriber receives at home. Given the compelling economics associated with providing entertainment content, it is natural for MNOs to wonder whether they, too, might be able to capture a piece of this business. T-Mobile in Germany, for example, offers a suite of TV packages for which the subscriber must pay a fee, and there are other such offers in the marketplace.

However, while we do not want to discourage operators from trying, we would like to sound a note of caution here. It will be very difficult for MNOs to get people to pay for TV programming in sizable numbers if their in-home cable/satellite provider already has or will soon have free programming accessible via phone and other devices. Users who want more mobile content than their in-home providers currently offer, or who don’t want to pay the relatively high fees associated with in-home services, are more likely to turn to pure OTT players such as Netflix or Hulu, both of which have very large market shares in developed countries. That leaves a relatively small group of heavy TV viewers who do not have access to Wi-Fi as the likely target for such an offer, since by subscribing to a mobile TV package they will not risk eating up their data allowance.

If mobile operators are going to break into this market, we would advise them to keep their prices low – say, under US $10 a month – and structure the service as an add-on to existing data plans. Furthermore, they should follow a niche strategy and offer blocks of channels designed to appeal to specific types of viewers, and we would suggest that children’s programming is a particularly rich vein in this regard (sports and news are also good options). Whatever the strategy, though, we believe it will be an uphill battle at best, and at worst a chase for “fool’s gold.” Perhaps if a network operator could come up with unique, intriguing original content they would have a fighting chance, but it seems to us that the cost of doing so would likely be greater than the potential return.

In short, we question the value of mobile TV as a revenue generator for MNOs. In the absence of original content, operators would still have to cut a lot of rebroadcasting deals that might end up costing more than they earn. At best, we anticipate mobile TV generating no more than marginal incremental profits.