Lannuzel: ‘The final challenge is to have a full IP platform until the disappearance of STBs’

Another of the virtual panels that took place during the last Nextv Series South America edition was entitled ‘How the new hybrid cable OTT platforms are performing in South America?’, in which the key topics of the debate were focused on consumer adoption of the new hybrid / DTH cable with OTT; whether hybrid platforms are increasing ARPU for pay TV or reducing rotation; and what to expect from this model in terms of evolution. Access to the panel is available on demand through this link.

The industry leaders gathered by Dataxis to star in the debate were Fabiana Orlotti, CEO at Montecable; Arnault Lannuzel, VP Sales Latam & South Europe at Broadpeak; Rodrigo Aliaga, Director at Digital TV Cable; and Fabian Di Cicco, General Manager at Red Intercable.

Regarding his vision of how cable operators are managing to promote VOD services in South America, Lannuzel reported that ‘we have seen different strategies of operators in the region. There was a similar path on all who were successful. First, starting with the non-linear content (VOD) in OTT while the operator was putting fiber in the network. The key to success in OTT is to have a solid and efficient network, with enough capacity to support this new traffic. Later, while they were setting up fiber networks, operators began to change their content and offer VOD content  hired in the US’, explained the executive. ‘Then, as part of this path, we have seen some operators who also decided to offer linear content on OTT, while continuing to offer this content on their STBs. Obviously, migration takes time and is a huge financial and technological challenge. For many operators, delivering linear content on OTT networks in the unicast world was a challenge, due to latency, the quality of experience, the risk represented by the peak of traffic, and other factors’. Later, Lannuzel said that ‘we still see many operators who want to maintain the two platforms: a platform for linear content in STBs, and an OTT platform, with multiplatform distribution. But, the challenge of maintaining two platforms means facing a cost. It represents consumption of resources. The final challenge is to have a full IP platform until the disappearance of the STBs, or STBs without a tuner. This will change the operators business model. The operators’ strategy is based on making life easier for the final user. For us, the challenge is based on the negotiation of content, and the technological part’, the executive ended.

Previously, Aliaga announced that Digital TV Cable will launch, between December this year and January 2021, its new on demand service. ‘We do not intend to compete with Netflix, but all the major studios are within this service, which will even have content available on TVOD, something that does not exist in Bolivia and which will be something important for the market’.

‘Uruguay has an HFC network where, up to now, it does not have a data license. It cannot provide internet access services. That does not mean that we think that, if we do not have that business possibility, we have nothing. So, we must do everything possible so that Montecable, through another network that, in this case, is Antel’s monopoly, can provide the service. The fact of owning the network is important, but it is not exclusive to provide the service. In addition, Uruguay has a huge amount of FTTH HPs, which makes us much more used to having many devices in homes being used at the same time, and there are no Wi-Fi problems’, said Orlotti. Regarding Montecable’s migration to Android TV, the executive said that ‘there is a matter of consumer culture. If I refer to my future clients, I have no doubt that, in the short term, we should bet on a pure OTT or pure internet model. But, we must also take care of the customer who is still paying our ARPU in the business, which is the customer who is not so adapted to these new technologies, which is why we continue to live with the hybrid model today. It also happens that it is very expensive to maintain both, especially when an HFC network has not been able to monetize. Hopefully, through the new Media Law, we can obtain the data license. That will take us to places where we cannot go today ”.

Regarding his point of view on the future of cable, Di Cicco stated that ‘first of all, cable operators are undergoing a transformation that has been going on for many years, going from the analogue to the digital world, and reaching interactivity, which has to do with  what new generations are going to consume and what they are going to demand in terms of content’. The executive also stated that ‘we see all this product as something that is integrated into the service offer’, and added that ‘the operator went from being a cable distribution operator to being a multi-service operator, where it places this product within its offer, and analyzes the business comprehensively. We currently see it as a complementary service that, although in some cases it can be profitable, we see profitability in the context of all the services that are provided’. Di Cicco also opined that ‘we see this model as a customer retainer, but we notice a transition, because for this to become a core business, it will take a long time. For the service to become widespread, distribution networks powerful enough are needed so that the user experience is really good, and that the user chooses to remain in the service. Our strategy is based on being the best operators in the last mile’, he stated.

Aliaga also expressed his point of view on the future of cable, and reported that ‘we have 60% of the network deployed in HFC; and 40% of the new network we have deployed is already a FTTH network. The technological shift towards the pure FTTH network is highly dependent on the investment cost, which, today, is still high. And, the amount of HFC network deployments, in Bolivia and in the world, are too expensive. So, the companies that work with HFCs continue working on improving the performance of the equipment they have today available. And, at the same time, an interesting growth is developing in FTTH’. Later, the Digital TV Cable executive reported that in the company ‘40% of the new network, which is FTTH, has a different target, with a different ARPU approach. We are aiming to be super aggregators, and we will try to sell those customers much higher speeds, more content, including OTTs that are in vogue, and obviously the ARPU will be higher. In the traditional network, we tend to manage customer retention, and provide a level of service according to what the market deserves’. Aliaga also emphasized that ‘becoming an OTT operator means that, in a neutral network, there are many doors opened in order to be a virtual operator. And that gives many advantages’.

Regarding the control of costs in the migration of pay TV operators to the future, Lannuzel said that ‘the idea is to be able to make the transition at a reasonable cost, while clients are migrating to IP. On the other hand, we are seeing a great development of commercial insertion in live OTT, nPVR and catch up. The insertion of commercials has been a successful business in 2019, and even more in 2020. We have implemented it in TVCable (Ecuador), in Megacable (Mexico), and it continues to be developed in different places. The purpose is not only to retain users, but to enhance the OTT product to awaken their interest in migrating from their traditional cable STBs to an Android STBs’.