Partnerships, More Content Said Key to Service Provider Growth
Pay-TV providers should seek alternative ways to make money as consumer video watching habits shift towards online viewing, analysts told a USTelecom conference on broadband. This may require cable and satellite companies to increase their own VoD offerings and partner with content providers and even health care professionals in order to grow, analysts said.
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Expanding VoD can be a shot in the arm for struggling service providers, said John Barrett of Parks Associates. His firm’s research concluded that a wide margin of consumers would rather have more content on their existing VOD service, rather than purchase an entirely new device. “This is an opportunity for service providers,” said Barrett. “If the whole goal is to get access to the online content and you add that to the mix of what you are already offering, it takes the wind out of the other devices.”
Pay-TV providers should also seek a strategy to monetize the content that they make available to consumers, said Barrett. His research said an ad-based model of content distribution was largely preferred by consumers over a paid subscription model. Consumers who were willing to pay a monthly subscription fee said they would pay no more than $15 per month on average. “The good news is that some consumers will pay something for the content,” said Barrett. “But they have the impression that the content is worth less than it is probably worth.”
Models that embrace interconnected TV sets as a means to add value should be avoided, warned Barrett. “Consumers are not yet convinced of the value propositions of connected TVs,” he said, “and some still don’t know what connected TVs are.” Parks Associates concluded that only 20 percent of households are familiar with the concept of a broadband-connected TV and that the total market value of adding a connected feature to sets is marginal.
Telemedicine is another opportunity for subscription-video providers looking to capture additional revenue, said another analyst. “Thanks to increased government support … now is a great time for service providers to develop a strategy” based on telemedicine, said Irene Berlinsky of IDC. She emphasized the billions of dollars that the government and FCC have promised to spend on modernizing healthcare information technology through the passage of healthcare reform, stimulus grants and the National Broadband Plan.
Service providers should partner with medical associations and hospitals to boost their credibility and learn how to successfully implement new strategies, said Berlinsky. The relationships can help them profit from health related telecommunications products such as remote patient monitoring, telepresence, electronic health records, and still image transmissions.
Cable companies and telcos have made large investments this year into expanding their broadband capacity. In the first nine months of 2010, cable providers have been more aggressive in providing broadband products above 10 Mbps, while telcos have a majority of their products below 10 Mbps, said a recent report by Telogical Systems. “There has really been a push into the mid and high tier for the cable companies, which is interesting considering we are in a recession,” said Andrew Woessner, the company’s president. The report also said cable providers are increasing downstream speeds at a faster rate than telcos, and cable’s standard prices are higher on average than the standard prices offered by telcos.