#5 – European pay-TV market goes 3C – Consolidation, Convergence and Collaboration

Summary: Northstream believes that in light of pressures from content cost and availability, new competition and changing end user behavior, the next step for the pay TV market in Europe will be to consolidate, converge and collaborate. Consolidation and convergence will increase user numbers and reduce churn and SAC pressure through bundling with fixed and/or mobile. Collaboration with OTTs and content providers will see the operators and OTTs combine forces to satisfy the changing end user needs that none of them can fulfill stand alone.


The Pay TV market is far from broken, yet. But several players are feeling the pressure.

For traditional pay-TV operators, growth is low to flat. Content is becoming increasingly difficult to negotiate with increasing cost for attractive content and restricted access to some content that studios and broadcasters rather sell direct through OTT channel. At the same time there are increasing demands from end users to consume the service in new ways.

The new and nimble OTT competitors are investing in development capabilities and are offering services with superior user experience, search, discovery and recommendation functions. At the same time traditional pay-TV providers are struggling with legacy systems and way of working while trying to create a unified experience and competitive multiscreen offers.

But despite the “hype”, the OTT players do not have an easy ride either. Several feel the pressure as the dominant Netflix expands its geographic footprint. Voddler has moved to white label model. Vivendi is looking to sell loss making OTT service Watchever in Germany. Magine is experiencing financial pressure in its home market Sweden.

What is the answer to the question above? Consolidation, convergence and collaboration. Rising content cost and difficulties in negotiations for attractive content can be eased by amassing a greater number of end users. This has happened in the US.

Convergence and bundling can help operators ease the churn and SAC burden, spreading the acquisition cost on several services as well as keeping customers longer. Bundled services are also a strong proposition for data hungry OTT video consumers, now that the era of “all you can eat data” is over.

OTT players are seeking ways to find customers cheaper and at the “TV screen”. Operators need the nimble action, development and OTT flavor. Therefore, collaboration is the third step to address the combined needs of end users for operators and OTT jointly. The market, solutions and content are fragmented. Collaboration can solve that.

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