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Broadband

KPN takes aggregator role with KPN Play service

Wednesday 29 April 2015 | 18:13 CET | Market Commentary

KPN is testing an OTT app called KPN Play. The app is expected to offer customers access to a wide range of content, including a number of live channels, catch-up TV and video-on-demand. The latter will likely be provided by its partner Videoland (RTL). Furthermore, the service will be available not only on the home Wi-Fi network, but anywhere in the country and even with other broadband providers. Pricing has not yet been announced.

KPN's app will free viewers both from their TVs (TV everywhere) and from broadcast schedules (on-demand viewing anytime), while still providing some live channels. With support for Google's Chromecast, viewers can also still watch at home if they like. The question is which market is KPN targeting?

  • The incumbents on the TV market (cable and satellite). While Ziggo already has its own app, the cable operator does not offer broadband-only. So a combination of KPN Play and Ziggo internet means the customer is paying for live TV twice.
  • In the US the satellite TV provider Dish Network recently started offering Sling TV. This OTT service offers a (growing) basic package of channels for a relatively low price (USD 20 per month). In addition, customers can add on packages of additional channels in various categories for USD 5 per month each. The new service is a response to the high price of TV service in the US, where consumers have been calling for 'a la carte' channel offers for years: choosing their own channels and only paying for what they want. Verizon (IPTV) and Cablevision (cable) are trying similar approaches, but deliver the basic packages over traditional platforms, rather than OTT.
  • Broadcasters. For example, in Germany the channel Super RTL is starting a SVOD service. The Dutch broadcasters RTL and SBS offer access over their apps to on-demand content but not live channels. RTL XL and Kijk (SBS) could add their own channels, like the NPO app does for the public channels. A complete offering of the top 11 channels in the Netherlands (NPO, RTL and SBS) does not appear possible yet though.
  • Internet players (Netflix, Google, YouTube, Apple, Magine, etc.). The content varies and only Magine (Sweden, Germany) and Apple (in development, only the US) are providing live TV.
  • Illegal providers such as Popcorn Time (on live TV).

Choice and more choice

It's not getting any easier for consumers, with the increasing number of providers of TV and video. Their offers vary according to content (live TV or not, new or old films, etc.). Ease of access is the constant: watching wherever and whenever you like. Netflix CEO Reed Hastings has already predicted the end of traditional TV. The opportunities are greater in the US given the high prices, but the idea of freeing viewing from the TV set and broadcast schedules is appealing everywhere. The consumer now faces a number of choices on how to spend his or her budget:

  • Do I want to watch live TV or not; if so, which channels.
  • For on-demand films and series, do I want premium content (HBO Now, Pathe Thuis) or is middle-of-the road content (Netflix) enough? Pay-per-view (TVOD) or a subscription service (SVOD)?
  • Where can I get exclusive content: Netflix series, Fox football, etc.

TV-only

KPN is positioning itself with KPN Play as a pure aggregator. Its margins are likely low. This is a noteworthy choice, as the broadband market is its most important income source. For example, Cablevision's Cord Cutter Package comes also with broadband (and Wi-Fi and voice over Wi-Fi). The risk is cannibalisation of KPN's own TV customers, especially given the support for Chromecast. KPN should target the service at customers who don't subscribe to a triple-play but would like a slimmed-down TV service. KPN does not currently offer a TV-only service, apart from the DTT service Digitenne which in 2017 will need to decide whether to lose or extend its frequencies. The new service could be a replacement for this. In addition, the service is interesting for customers who only take broadband and would like a more basic TV service.

The chance of customers switching to Ziggo is small, as they would then be paying twice for TV. That is until Ziggo launches a broadband-only subscription.



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