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LAUNCHING A SUCCESSFUL IPTV SERVICE

                                       SVP Advisors




                           For further information please contact:

                      Dimitri Kallinis (dimitri.kallinis@svpadvisors.com)




www.svpadvisors.com
                                                     RETHINKING communications
Significant value can be added throughout the IPTV lifecycle


    Assessing the          Launching the                Maximizing
     opportunity              service                    revenue


     Market &                                            Commercial
    Technology                 Strategy                    review
      Review




    Gap analysis               Planning                 Profit analysis




                                                         Service &
                              Project                     content
     Positioning
                            development                 optimization



                               Testing &                  Revenue
     Objectives                                          stimulation
                            go-to-market


2                          Madrid, 2009© SVP Advisors
The objectives and targets set the framework for service launch


            MARKET CHARACTERISTICS                                  OBJECTIVES        BUSINESS TARGETS

                                                                   Become leading
        •   Low Pay TV penetration                                   provider of
        •   Strong TV consumption                                   premium TV
                                                                       content                ARPU
    T
    V
        •   Hi Pay TV penetration                                  Differentiate TV         CONNECTED
                                                                      offer with           HOUSEHOLDS
        •   Poorly differentiated offer                             innovative IP
                                                                   based services


        •   Low BB penetration                                        Accelerate
                                                                    penetration of             BB
        •   High connection speeds (>6Mbps)                         the BB service           MARKET
    B                                                                                        SHARE
    B                                                              Differentiate              CHURN
        •   High BB penetration                                  value proposition             RATE
        •   Service seen as a commodity
                                                                  to boost sales
                                                                    and retain
                                                                    customers

3                                             Madrid, 2009© SVP Advisors
The IPTV strategy is built around four pillars which are highly
                                         dependent on each other


         IPTV Platform                                            Provisioning
          Set-Top-Box                                                 EPG
          Architecture                                          Graphic Interface



                                                   Customer
                         Infrastructure
                                                   Experience


                                     IPTV
                                   STRATEGY


                         Commercial                  Content




           Packages                                               VoD / SVoD
            Pricing                                               TV Channels
          Advertising                                                 VAS




4                                  Madrid, 2009© SVP Advisors
The choices of the platform and the system architecture are both
                                                          very critical …
    IPTV STRATEGY: INFRASTRUCTURE




             IPTV PLATFORM ARCHITECTURE
                                                                           •   The IPTV service is delivered
                                                                               through     a   multi-layered
         Content           Head-End Live                                       platform made of several
        Ingestion               TV                                             integrated modules


                                                                           •   As a rule of thumb       the
                                             Subscriber
      Security                                                    Set          modules should be:
                                                User
     Conditional                                                  Top
                                              Interace                         •   Highly scalable
       Access,            Middleware                              Box
                                               (SUI)
     Encryption,                                                               •   Open to support multiple
        DRM
                                                                                   contents and services
                                                                               •   Able   to     guarantee
     VoD & Content Delivery Network                                                maximum service security


                    Systems & Service monitoring

                         IP Access Network




5                                             Madrid, 2009© SVP Advisors
… and depend on the objectives, available resources and time
                                  requirements of each specific Operator
    IPTV STRATEGY: INFRASTRUCTURE




                                                                                                Multiple Vendors
        Closed                 Single Vendor                                     Open          (Ericsson, Thomson,
                               (e.g. Microsoft)                                Platform            Independent
       Platform                                                                                    Providers,…)


     • High upfront, scalability, recurring costs                         • Low upfront and maintenance costs

     • Small internal engineering team required                           • Internal engineering team is mandatory

     • Easy and relatively quick to go live with                          • Strong capability in driving service
     featured platform’s services                                         roadmaps, defining functionalities and
                                                                          service range
     • Services and functionalities directly
     dependent on product release roadmaps                                • Flexible and easy to customize

     • Long and uncertain response time on new                            • Responds effectively to new service
     product and service requirements                                     additions and expanding customer base


     Examples: Swisscom, British Telecom, Bell                             Examples: France Telecom, Belgacom,
     Canada, Deutsche Telekom                                              Fastweb, Telefónica, Free,




6                                                 Madrid, 2009© SVP Advisors
The customer experience begins with the installation of the Set Top
                                   Box and the provisioning of the service
        IPTV STRATEGY: CUSTOMER EXPERIENCE




    Connection                                                                     •   The installation of the STB
     cost ($)                                                                          (connection to network and TV
                                                                                       set) must not be underestimated
                                                       On site “full”
                                                        installation
                                                           (includes
                                                      internal wiring)             •   It is not uncommon for operators
                                                                                       to discover that a relevant % of
                                       On site “light”
                                        installation                                   delivered     STBs     end   up
                                         (courier +                                    unconnected
                                           demo)

                                                                                   •   In general, the higher the
                      Telephone
                       assisted                                                        installation cost the greater the
                     installation                                                      % of STB connected


            “Plug and                                                              •   A good solution could be to offer
          Play” solution                                                               various options to the customer
                                                                                       to choose from


                                              % of STB connected
                                               over provisioned

7                                                     Madrid, 2009© SVP Advisors
A functional and captivating User Interface is essential to achieve
                                             high levels of service usage
    IPTV STRATEGY: CUSTOMER EXPERIENCE



             An efficiently performing User
                       Interface shall:

       •   Include graphics which are directly built
           upon the selected STB …


       •   … and have been conceived explicitly for
           a TV user environment


       •   Be simple and quick to navigate …


       •   .. and present a pleasant “look and feel”


       •   Effectively help users to find the content
           of their choice among hundreds of titles
           and service applications


       •   Strike a good balance between strong
           interactivity and the smooth operation
           of the system


8                                           Madrid, 2009© SVP Advisors
The number of existing and potential subscribers determines the
                              quantity and quality of the content offered
    IPTV STRATEGY: CONTENT


                   Content value ($)                                           ILLUSTRATIVE

                                                                                                       Acquisition of
                                                                                                     premium TV rights
                                                                                                          (rare)


                                                                                   Own TV channels
                                                                                     (e.g. Sports)
           VoD Library                                                   Premium TV
         (Hollywood and                                                    channels
           local titles)                                              (localized version)


                                              Premium TV
                                                channels
                                              (int’l version)




                               TV Games
      FTA TV channels      (casual games e.g.
        (National and      Tetris, Solitaire, …)   VAS (e.g. catch-
        International)                             up TV, HD, etc…)
                                                                                                       N of subscribers

                           Service
                           launch

9                                                     Madrid, 2009© SVP Advisors
Each type of content should be approached in a different way
     IPTV STRATEGY: CONTENT




                    • Diversify the offer in terms of title, age (current, library, classical) and genre

                    • Refreshment rate and number of blockbuster titles are key success factors
        VoD         • Expect to pay high minimum guarantees and revenue share above 50%



                    • No (or very small) fees are usually paid for FTA channels

                    • Int’l versions of premium channels are sold for a flat fee or a fee/sub/mth
        TV
                    • Localized versions (subtitled, dubbed, voiceovered) always require a premium
     channels


                    • Catch-up TV and time shifting can become your killer applications

                    • Usually an “all-you-can-eat” model works best for TV Games
        VAS         • There are (too) many VAS on offer – only very few can make an impact




10                                             Madrid, 2009© SVP Advisors
The commercial offer can vary considerably as a result of the
            content offered and the TV market characteristics of each Country
         IPTV STRATEGY: COMMERCIAL


                                                         Thematic                        Premium
                             A la carte                                                                       All inclusive
                                                         packages                        packages

          VoD                   Pay per view               Pay per view                    Pay per view
     (pay per view)
                                                                                                                All premium
                                                             Sports                                             TV channels
     Premium TV                                                                          All premium                  +
      channels                                          Documentaries
                                                                                         TV channels
                                                                                                                All VoD titles
                                                              Kids
                                                                                                                      +
                                                                                                                 Unlimited
                                                           Currents
     Subscription                                                                        All VoD titles             plays
        VoD                                                 Library                                                   +
                                                                                                                   All FTA
      TV Games                 Pay per game             Unlimited plays                 Unlimited plays           channels
                                                                                                                      +
       FTA TV                                                                                                   VAS (if any)
                            National + Int’l            National + Int’l                National + Int’l
      channels*



                                                                                                  Level of content aggregation
      * Often included in the entry/basic TV package (free of charge, e.g. part of a
      triple play bundle, or for a small monthly fee)
11                                                         Madrid, 2009© SVP Advisors
The IPTV launch is a long project consisting of many activities
                  grouped in four phases and involving several departments


     Concept              Development                                   Pilot           Launch


     • High-level           • Systems                            • Friends & Family    • Soft launch
     service definition     purchase and                         (100-200 users)       (optional)
                            integration
     • Platform (or                                              • Limited content     • Commercial
     modules)               • STB purchase                       and functionalities   offer (service
     selection              and testing                          (offline)             bundles, promos,
                                                                                       etc…)
     • RFP to vendors       • User interface                     • Data gathering
                            design                               and elaboration       • Marketing event
     • Draft budget for
     investments and        • Integration with                   • Fine tuning of      • Media campaign
     content costs          network and IT                       full scale
                            (CRM, billing,                       deployment            • Sales
     • Internal product     OSS)
     requirement


                                                  Content acquisition and aggregation


               Time required to complete the process: minimum 6 months

12                                         Madrid, 2009© SVP Advisors
SVP can help Operators make the most of their IPTV service

           We are ideally placed …                                      … to add value to IPTV services

     Our Consultants have developed a                                  We can leverage our outstanding track-
     unique set of skills and gained                                   record to help Operators make their
     unrivalled international experience                               IPTV service successful.
     on IPTV thanks to work carried out in:
                                                                       We     are    equip     to undertake an
     •   Technical and commercial IPTV                                 assortment of assignments during the
         operations in 5 large European                                various phases of the IPTV service
         Countries                                                     lifecycle - indicatively:
     •   Advisory projects for Operators and
         projects on behalf of financial                               •    End-to-end project support
         institutions                                                  •    Business planning
                                                                       •    Int’l benchmarking
     Furthermore, our Consultants form part                            •    Content acquisition & aggregation
     of an extensive business network of:
                                                                       •    Commercial offer definition & review
                                                                       •    Service bundle maximization
     •   Content providers and aggregators
                                                                       •    Profit analysis
     •   Vendors and IPTV solution providers
                                                                       •    Revenue stimulation
     •   System integrators
                                                                       •    Regulatory support (for incumbents)



13                                             Madrid, 2009© SVP Advisors
Any questions or comments?

                                              Please contact:

                                              Dimitri Kallinis
                                              Partner
                                              dimitri.kallinis@svpadvisors.com


                                              Address:

                                              C/ Almagro 15, 5th floor
                                              28010, Madrid
                                              Spain

                                              Telephone number:

                                              +34 91 310 2895

                                              Fax number:

                                              +34 91 141 28 11




2009 © SVP Advisors   STRICTLY CONFIDENTIAL

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Launching A Succesful IPTV Service

  • 1. LAUNCHING A SUCCESSFUL IPTV SERVICE SVP Advisors For further information please contact: Dimitri Kallinis (dimitri.kallinis@svpadvisors.com) www.svpadvisors.com RETHINKING communications
  • 2. Significant value can be added throughout the IPTV lifecycle Assessing the Launching the Maximizing opportunity service revenue Market & Commercial Technology Strategy review Review Gap analysis Planning Profit analysis Service & Project content Positioning development optimization Testing & Revenue Objectives stimulation go-to-market 2 Madrid, 2009© SVP Advisors
  • 3. The objectives and targets set the framework for service launch MARKET CHARACTERISTICS OBJECTIVES BUSINESS TARGETS Become leading • Low Pay TV penetration provider of • Strong TV consumption premium TV content ARPU T V • Hi Pay TV penetration Differentiate TV CONNECTED offer with HOUSEHOLDS • Poorly differentiated offer innovative IP based services • Low BB penetration Accelerate penetration of BB • High connection speeds (>6Mbps) the BB service MARKET B SHARE B Differentiate CHURN • High BB penetration value proposition RATE • Service seen as a commodity to boost sales and retain customers 3 Madrid, 2009© SVP Advisors
  • 4. The IPTV strategy is built around four pillars which are highly dependent on each other IPTV Platform Provisioning Set-Top-Box EPG Architecture Graphic Interface Customer Infrastructure Experience IPTV STRATEGY Commercial Content Packages VoD / SVoD Pricing TV Channels Advertising VAS 4 Madrid, 2009© SVP Advisors
  • 5. The choices of the platform and the system architecture are both very critical … IPTV STRATEGY: INFRASTRUCTURE IPTV PLATFORM ARCHITECTURE • The IPTV service is delivered through a multi-layered Content Head-End Live platform made of several Ingestion TV integrated modules • As a rule of thumb the Subscriber Security Set modules should be: User Conditional Top Interace • Highly scalable Access, Middleware Box (SUI) Encryption, • Open to support multiple DRM contents and services • Able to guarantee VoD & Content Delivery Network maximum service security Systems & Service monitoring IP Access Network 5 Madrid, 2009© SVP Advisors
  • 6. … and depend on the objectives, available resources and time requirements of each specific Operator IPTV STRATEGY: INFRASTRUCTURE Multiple Vendors Closed Single Vendor Open (Ericsson, Thomson, (e.g. Microsoft) Platform Independent Platform Providers,…) • High upfront, scalability, recurring costs • Low upfront and maintenance costs • Small internal engineering team required • Internal engineering team is mandatory • Easy and relatively quick to go live with • Strong capability in driving service featured platform’s services roadmaps, defining functionalities and service range • Services and functionalities directly dependent on product release roadmaps • Flexible and easy to customize • Long and uncertain response time on new • Responds effectively to new service product and service requirements additions and expanding customer base Examples: Swisscom, British Telecom, Bell Examples: France Telecom, Belgacom, Canada, Deutsche Telekom Fastweb, Telefónica, Free, 6 Madrid, 2009© SVP Advisors
  • 7. The customer experience begins with the installation of the Set Top Box and the provisioning of the service IPTV STRATEGY: CUSTOMER EXPERIENCE Connection • The installation of the STB cost ($) (connection to network and TV set) must not be underestimated On site “full” installation (includes internal wiring) • It is not uncommon for operators to discover that a relevant % of On site “light” installation delivered STBs end up (courier + unconnected demo) • In general, the higher the Telephone assisted installation cost the greater the installation % of STB connected “Plug and • A good solution could be to offer Play” solution various options to the customer to choose from % of STB connected over provisioned 7 Madrid, 2009© SVP Advisors
  • 8. A functional and captivating User Interface is essential to achieve high levels of service usage IPTV STRATEGY: CUSTOMER EXPERIENCE An efficiently performing User Interface shall: • Include graphics which are directly built upon the selected STB … • … and have been conceived explicitly for a TV user environment • Be simple and quick to navigate … • .. and present a pleasant “look and feel” • Effectively help users to find the content of their choice among hundreds of titles and service applications • Strike a good balance between strong interactivity and the smooth operation of the system 8 Madrid, 2009© SVP Advisors
  • 9. The number of existing and potential subscribers determines the quantity and quality of the content offered IPTV STRATEGY: CONTENT Content value ($) ILLUSTRATIVE Acquisition of premium TV rights (rare) Own TV channels (e.g. Sports) VoD Library Premium TV (Hollywood and channels local titles) (localized version) Premium TV channels (int’l version) TV Games FTA TV channels (casual games e.g. (National and Tetris, Solitaire, …) VAS (e.g. catch- International) up TV, HD, etc…) N of subscribers Service launch 9 Madrid, 2009© SVP Advisors
  • 10. Each type of content should be approached in a different way IPTV STRATEGY: CONTENT • Diversify the offer in terms of title, age (current, library, classical) and genre • Refreshment rate and number of blockbuster titles are key success factors VoD • Expect to pay high minimum guarantees and revenue share above 50% • No (or very small) fees are usually paid for FTA channels • Int’l versions of premium channels are sold for a flat fee or a fee/sub/mth TV • Localized versions (subtitled, dubbed, voiceovered) always require a premium channels • Catch-up TV and time shifting can become your killer applications • Usually an “all-you-can-eat” model works best for TV Games VAS • There are (too) many VAS on offer – only very few can make an impact 10 Madrid, 2009© SVP Advisors
  • 11. The commercial offer can vary considerably as a result of the content offered and the TV market characteristics of each Country IPTV STRATEGY: COMMERCIAL Thematic Premium A la carte All inclusive packages packages VoD Pay per view Pay per view Pay per view (pay per view) All premium Sports TV channels Premium TV All premium + channels Documentaries TV channels All VoD titles Kids + Unlimited Currents Subscription All VoD titles plays VoD Library + All FTA TV Games Pay per game Unlimited plays Unlimited plays channels + FTA TV VAS (if any) National + Int’l National + Int’l National + Int’l channels* Level of content aggregation * Often included in the entry/basic TV package (free of charge, e.g. part of a triple play bundle, or for a small monthly fee) 11 Madrid, 2009© SVP Advisors
  • 12. The IPTV launch is a long project consisting of many activities grouped in four phases and involving several departments Concept Development Pilot Launch • High-level • Systems • Friends & Family • Soft launch service definition purchase and (100-200 users) (optional) integration • Platform (or • Limited content • Commercial modules) • STB purchase and functionalities offer (service selection and testing (offline) bundles, promos, etc…) • RFP to vendors • User interface • Data gathering design and elaboration • Marketing event • Draft budget for investments and • Integration with • Fine tuning of • Media campaign content costs network and IT full scale (CRM, billing, deployment • Sales • Internal product OSS) requirement Content acquisition and aggregation Time required to complete the process: minimum 6 months 12 Madrid, 2009© SVP Advisors
  • 13. SVP can help Operators make the most of their IPTV service We are ideally placed … … to add value to IPTV services Our Consultants have developed a We can leverage our outstanding track- unique set of skills and gained record to help Operators make their unrivalled international experience IPTV service successful. on IPTV thanks to work carried out in: We are equip to undertake an • Technical and commercial IPTV assortment of assignments during the operations in 5 large European various phases of the IPTV service Countries lifecycle - indicatively: • Advisory projects for Operators and projects on behalf of financial • End-to-end project support institutions • Business planning • Int’l benchmarking Furthermore, our Consultants form part • Content acquisition & aggregation of an extensive business network of: • Commercial offer definition & review • Service bundle maximization • Content providers and aggregators • Profit analysis • Vendors and IPTV solution providers • Revenue stimulation • System integrators • Regulatory support (for incumbents) 13 Madrid, 2009© SVP Advisors
  • 14. Any questions or comments? Please contact: Dimitri Kallinis Partner dimitri.kallinis@svpadvisors.com Address: C/ Almagro 15, 5th floor 28010, Madrid Spain Telephone number: +34 91 310 2895 Fax number: +34 91 141 28 11 2009 © SVP Advisors STRICTLY CONFIDENTIAL