Multi-play strategies put pay-TV 'at risk'

Pay-television could be at risk from a growing proliferation of cut-price multi-play offerings, claims a new study.

A report from global media, IT and telecoms adviser Analysys claims that overall consumer spending on pay-TV services, broadband and fixed telephony in western Europe could suffer from moves by media and communications companies to increase take-up of their 'double-play' and 'triple-play' services.

The Analysys paper—entitled The Impact of the Multi-service Play: Scenarios for Future Growth—believes that increased commoditisation of telecoms services under the banner of 'triple-play' and driven by a small number of 'super-providers' could lead to a decline of 9% in total subscriber spending between 2005 and 2011—by which time, between 11% and 17% of western European households are expected to have subscribed to 'triple-play' packages, and between €14.8bn and €16.2bn will have been spent on such offerings.

Report author Stephen Sale said: "The result is that potential increases in pay-TV spend could be squandered as TV services are subsumed in heavily discounted triple-play bundles".

However, Sale's co-author, Richard Hadley, said that if the majority of service providers opted for a value-based strategy, striving to maintain value in core services by investing in TV content and technological innovation instead of relying on aggressive discounting, multi-play penetration would be lower, but total spend would increase by 10% between 2005 and 2011.

Finally, Sale added that in reality, neither a price-driven nor a value-driven strategy is likely to dominate throughout western Europe. He noted that markets can and will segment, and the strategies will, to a large extent, co-exist.

But, said Sale, markets with limited growth opportunities in pay-TV or very competitive broadband markets, such as the Netherlands or Sweden, are more disposed to price-based competition, and the long-term tendency across most markets is towards a price-driven scenario.