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NewsGlobe: Financial
Don’t Count On VoD For IPTV Success, Warns PCCW
Hong Kong Operator Opts For IPTV Strategy Based On Pay Channels
by Ken Wieland
When Paul Berriman, the head of strategic market
development at PCCW, gives his advice on IPTV rollout it’s
probably worth listening to.
So what’s his IPTV advice? “We learned a lot from our first
foray into TV back in 1998 when we launched an ATM-based
service focused solely on video-on-demand [VoD],” says
Berriman. “It wasn’t very successful and one of the reasons
for that, as we discovered, is that telcos aren’t very good at
aggregating content. That’s why with IPTV we’ve concentrated
on buying and selling channels.”
At its peak, PCCW’s VoD service attracted around 90,000
subscribers but was closed in September 2002.
Lack of attractive content, arguably, was not the only reason
for the service’s downfall. Technical glitches and high-priced
set-top boxes (over US$500) no doubt played their part, but
Berriman is convinced that a VoD-based strategy was the
wrong route to follow.
The subsequent subscriber uptake success of PCCW’s
channel-purchasing strategy – on both an ‘a la carte’ and
bundled package basis – would seem to vindicate his view.
Since the launch of PCCW’s ‘Now’ branded IPTV service in
September 2003, Berriman says that it has enjoyed ‘linear
growth.’ “We haven’t officially announced our IPTV subscribers
for the end of last year but I see no reason why we can’t
make our target of 750,000,” he says.
Apart from allowing customers to select and purchase their
own TV channels, Berriman says that having a pro-active
outbound call center is a ‘core competence’ and a major factor
behind the growth of Now.
“When we first launched the service, the monthly ARPU was
very low at around HK$50 [US$6] as customers typically
selected only a few movie channels," says
Berriman. “However, when our call center staff started to ring
up our customers to explain that they could select a list of
channels at a discount [‘mini packs’] the ARPU doubled to
over HK$100 [US$12] within six months.”
For the first six months of 2006, PCCW reported a monthly
ARPU of HK$118 (US$14.5) for its Now service. It may seem
low but Berriman sees the figure increasing over time as take-
up increases for the larger bundles of channels that PCCW
now offers – the so-called ‘super value’ TV packs. Add-on
packages in this category range from HK$178 (US$22) to over
HK500 (US$61.50) per month.
PCCW is also beginning to push subscription VoD and
interactive services, but the channels themselves act as
portals for these. For example, subscribers to the Star TV
Movie channel – for an extra HK$15 (US$1.91) per month – can have
access to that channel’s library of films. To access PCCW’s
stock price service, customers need already to have
subscribed to the business channels.
“For us, VoD and interactive services are the icing on the cake
rather than a core part of the [IPTV] business,” says
Berriman. “In any case, new services have to be introduced
gradually onto the market.”
This view is diametrically opposed to the BT Vision strategy
(http://www.telecommagazine.com/newsglobe/article.asp?
HH_ID=AR_2940), which is depending on VoD and interactive
services as its only source of revenue.
Diplomatically, Berriman says he will be watching how BT
Vision progresses ‘with interest’. “Good luck to them,” he
says, careful to omit the implied ‘you’re going to need it.'
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