icable business model
TRANSCRIPT
MSc. in New Media
CHEN,Yanjuan
LIANG,Weishan
LUO,Meng
YE,Xuelin
ZHONG,Xingyu
i-CABLEi-CABLE
Outline
01 PROTEIN framework Analysis
02 Five Forces Analysis
03 Strategy
Introduction
Introduction
• i-Cable Communication Limited ---1999• integrated communications companies
•Residential fixed-line
•PayTV service (Free TV in the coming year)
•Dial-up internet access service
•Broadband internet access service
•Multimedia contents
1,089,000.00 1,074,000
201,000 199,000126,000 120,000
Dec-12 Jun-13
Customers
Television Broadband Telephony
Introduction
• Hong Kong Cable Television (HKCTV)---1993
• Owned and operated by i-Cable CommunicationLimited
• More than 100 channels and programmes over30,000 fresh programming a year, including10,000 hours of its own production
HKCTV
• News – Self produced professional news– Introduced in-depth reports, sharing unique perspective of the most
topical news & current affairs on the mainland China.
• Sports– Exclusive– Diversity– Official broadcaster of the 17th Asian Games Incheon 2014
• Entertainment– FAN Entertainment Channel奇妙娛樂台
– CABLE Drama Channel奇寶劇集台
HKCTV---Programming
• Viewing Share Among Pay TV Operators
50%
27%
15%
7%
0%
10%
20%
30%
40%
50%
60%
HKCTV NOWTV TVBNV bbTVSource: Nielsen HKTAMPay TV viewers aged 4+Jan – Jun 2013, All Day All Time* Excluded 8 TVBNV channels via Now TV platform^ Included 8 TVBNV channels via Now TV platform
HKCTV---Viewership
• CABLE HomeLine Service offers users unconventional fixed line telephone service, which allows customers to enjoy great convenience by providing value-added-services
• iFAX
• MobileLine
i-Cable Homeline (Fixed Line)
• Hong Kong's 2nd largest Broadband Internet access service provider
• Cover over 90% of the 2-million households in Hong Kong.
i-Cable Broadband
• All media rights with extensive live & archived coverage in multiple formats across media platforms
• Pay TV content based
• Portals on news, sports, horse racing, stocks, etc.
• Mobile Apps
Multimedia
Player
• Integrated communication company• Pacific Century Cyberworks Limited (PCCW)• Hong Kong Broadband Network Limited (HKBN)
• Other PayTV supplier• Television Broadcasts Limited Network Vision (TVBNV)
• Other fixed line & broadband suppliers• Hutchison Global Communication Limited (HGC)• New World Telecom (NWT)
PCCW• Formed in 2000, PCCW is the first
quadruple-play provider in Hong Kong and offers a range of innovative media content and services across four delivery platforms –fixed-line, broadband Internet access, TV and mobile.
Player--- PCCW
• Now TV • Launched in September 2003
• Currently NOWTV is the largest pay-TV station in Hong Kong.
• Offers more than 190channels,including 19 channels from TVB pay version. Now TV is not only Hong Kong but also worldwide pioneer in IPTV.
• a la carte pricing : allow subscribers to take on just those channels that they are really interested in.
PCCW---NOWTV
• PCCW's fixed-line service – eye Multimedia Service and PCCW eye2 – Hong Kong Telecommunications (HKT) Limited.
• NETVIGATOR is Hong Kong's premier broadband provider, reaching 97% of all households in Hong Kong and serving broadband users with a wide choice of Internet access speeds.
• Multimedia Platform: – Now.com.hk--- 5,000+ streaming video contents– --- Hong Kong's largest multi-platform digital music service
PCCW---Fixed Line, Broadband & Multimedia
Player--- HKBN
•PayTV----bbTV•IPTV• Net TV
• Internet access• Fixed line• Multimedia services
Revenue model
Subscription
Advertising
Content licensing
Televisions related service
Network maintenance
Revenue Model
Revenue Model---Subscription
PayTV---HKCTV
Broadband Service
Fixed Line
Bundling
Plan Package Service Price(Monthly)
Family Select
Basic Pack 74 channels $319HKD
News+EntertaionmentPack 47channels $158HKD
Entertainment +Movies Pack 47 channels $158HKD
Subscription---HKCTV
Package Service Price (Monthly)
CABLE TV Basic Pack+50M Broadband
75 channels+50M $419HKD
CABLE TV Basic Pack +HomeLine Service
75channels+homelineservice
$379HKD
CABLE TV Basic Pack +130M Broadband +HomeLine Service
75channels+130M+homeline service
$509 HKD
Subscription---Bundling
Subscription
Advertising
Content licensing
Televisions related service
Network maintenance
Revenue Model
Revenue Model---Advertising
Portal banner ads
In-stream video ads
Mobile apps ads---pop-ups
TV commercial
Cable Guide ads
MTR Newsline Express ads
Subscription
Advertising
Content licensing
Televisions related service
Network maintenance
Revenue Model
Operation
Technology
Company visit: How news are produced in HKCTV
• i-CABLE owns and operates one of two near universal coverage two-way interactive telecommunications networks in HK.
• It delivers domestic pay television programs, Internet and VolP services mainly by hybrid fiber-coax (HFC) network, supplemented by MMDS and satellite transmission.
Source:Broadcasting Authority Annual Report 2010-2012
HFC (Hybrid Fiber-Coax )
• HFC architecture is an optimized combination of fiber in the trunk and coaxial cable in the feeder and drop.
encrypted
decrypted
• Retained to serve a small number of subscribers in remote areas of the territory.
• MMDS (Multi-channel Multipoint
• Distribution Service):
Low frequency;
Less susceptible to interference.
Microwave trunk transmission system
Held, G.(2001)
Satellite:Transmits broadcast signals from satellites orbiting the Earth; Receive radio signals using satellite dishes.
Ecology
Content Origination
Content Production
Distribution & Syndication
Content Consumption
Music
Program, producer, ar
tist
i-CABLE
Syndicator
CASH
Cable
Satellite
Wireless Operator
Home User(STBTV,
Telephone, Internet)
Wireless Users
$
$
$
$
$
Intelligence
Property
License fees for exclusive prized contents E.g.: sports programme, appealing
channels/Royalties of music from CASH
illegal decoders
illegal online content Threat
TechnologyTaskforce
Conditional Access System (CAS):Set-top box and smart card
Digital rights management (DRM):Multi-terminal devicesContent keys or embedded watermarks
Over-the-top1.delivery of voice, video and data service straight
from the provider to the viewer via public Internet,
without going through the MSOs or telecoms.
2. Consumers can access OTT content any time,
any place to any terminal devices.
3. pay TV operators to partner with OTT providers
or run OTT service itself.
1、generate new ad revenue from its well-regarded content production 2、attract more customers to subscribe to its pay-TV service
need to produce massappealprogramme to compete with TVB ,such as soap drama,too expensive to produce too long to build critical audience
Free TV-Is it a good thing?
Outline
01 PROTEIN framework Analysis
02 Five Forces Analysis
03 Strategy
Rivalry among Existing Competitors
Service
HKCTV NOW TV TVB Network Vision
bbTV
Channels 112(HD 12)
216(HD 30)
74(HD 18)
94
Pricing Model
Pay-per-package à la carte pricing
Basic packagePay-per-channel
(for premium channels)
Movie channel package
Pay-per-channel
Source:A List of Licensed Broadcasting Services in Hong Kong (As at 15 November 2013). Office of the Communication Authority
1
Content
HKCTV NOW TV TVB Network Vision
bbTV
Channels 112 216 74 94
Self-producedchannels
21 32 17 3 (preview channel and
program guide)
Rate of Self-produced channels
18.8% 14.8% 23.0% 3.2%
Source: Official websites of NOW TV, i-Cable ,TVB Network Vision & bbTV
2
Penetration
HKCTV NOW TV TVB Network Vision
bbTV
Subscribers in
2012(Households)
1,089,000 1,183,000 Nearly 170,000 195,000
Subsribers in 2011
(Households)
1,106,000 1,140,000 Nearly 200,000 181,000
changes -17,000 +43,000 -30,000 + 14,000
Source: Annual Report (2012) of i-Cable, PCCW, HKBN ; Annual Report (2011) of TVB, PCCW, i-Cable
3
Exclusive rights of sports channels
HKCTV NOW TV TVB Network Vision bbTV
Football 欧冠 歐霸 英超 英格兰足總盃
意甲 法甲
德甲 日本J1 西甲 西班牙国王杯
英冠 美足聯
4
Financial review
HKCTV NOW TV
Turnover(million)
820(-4%)
1299(+3%)
EBITDA(earnings before interest,
tax, depreciation and amortization )
(million)
-6.9(2012: 20)
29(2012: 28)
EBITDA margin 0.2%(2012: 3%)
17%(2012: 17%)
(2013.1-2013.6 )Source: 2013 Interim Results of PCCW & i-Cable
5
Technology
HKCTV NOW TV TVB Network Vision
bbTV
Transmission Mode
HFC, MMDS,satellite (Digital)
Broadband network (Digital)
Satellite , broadband
network (Digital)
Broadband network (Digital)
Source: broadcasting authority annual report 2010-2012
6
Bargaining power of customers
• 1. Differential advantage of industry products close substitute:
similar types of channels
• 2. Buyers’ scale
Source: key communication statistics. Office of the Communication Authority
Total number of subscribers of licensed domestic pay television services (September 2013)
2,445,000
Penetration of licensed domestic pay television services (September 2013)
101%
Bargaining power of customers
• 3. Buyer switching costsContract expiry: no actual cost
Service cancellation fee: 800 or remained monthly fee
• 4. Buyer information availabilityStalls set up in neighborhood
Hong Kong “Street Fighters”
Bargaining power of customers
Bargaining Power of Suppliers
Content Suppliers Unique selling point: News and current affairs; Entertainment
Dependence on content suppliers
Cable TV Content suppliers
e.g. TV series and sports programmes
Weaker financial background and business support system than NOW TV >>> less likely to bid a higher price
exclusive broadcasting rights
auctions and biddings (Intern ational channels and external organizations)
Technology Supplier Self-owned transmission network and service:
Hybrid Fiber Coaxial Cable (HFC) supplemented by
Microwave Multipoint Distribution System (MMDS) and
satellite transmission
By March 2012, HKCTV’s network covered around 2.3 million households, i.e. 97% of the total households in Hong Kong(Broadcasting Authority Annual Report, 2010-2012)
Bargaining Power of Suppliers
Bargaining Power of Suppliers
(medium)
Content Suppliers (high)
Technology Suppliers (low)
Bargaining Power of Suppliers
Threat of New Entrants
Market dominance of three domestic pay television program service licensees:
Hong Kong Cable Television Limited
PCCW Media Limited
TVB Network Vision Limited
High entry barriers in the pay TV market
Finance: high start-up and operation cost
Technology: high requirement of technical expertise
Operation License: government approval
Approval of free TV broadcast license to Fantastic Television by
HK government
Doubled free-to-air TV operators >>> Growing competition in the free TV
market
More support for the free TV channel
I-Cable: investment of HK$1 billion in the fist six years (Bloomberg, 2013)
Decreasing support for pay TV channels >>> competitiveness weakened
Threat of New Entrants
Low threat of new entrants
Threat of Substitute Products or Services
Substitutes regarding Transmission Modes Digital terrestrial television (DTT)—— Free-to-air TV
Free of charge;
More television channels;
High-definition television programmes
Broadband network (IPTV)
TVB Pay Vision could be accessed via the same set-top box of PCCW Media with aseparate electronic programming guide which is distinguishable from that of PCCWMedia’s “now Broadband TV” service.
Coverage of Different Television Transmission Modes in March 2012
Threat of Substitute Products or Services
(Broadcasting Authority Annual Report, 2010-2012)
Threat of Substitute Products or Services
Similar types of channels/ programmes
Fully digitized platforms of all the pay televisions
Zero switching cost after contract expiry
Other pay TV
services
Illegal decoder
retailers
Crack passwords to unlock pay TV decoders
Pirate viewing of Cable TV programmes
Loss of potential customers of Cable TV
OTT TV (Over-the-top)On-demand service
Multiple platforms access: tablets, smartphones, connected TVs, STBs and web
Delivery of video and audio over the Internet by third party content providers: Now TV, Netflix, Hulu
High threat of substitute products or services
Threat of Substitute Products or Services
Porter’s Five Forces Model
1
• Glenn Britt, CEO of Time Warner:
“Embrace all of the screens”;
“There is no such thing as a TV anymore.”
• Interview: Alan Cheung – Controller of
i-CABLE’s New Media Development Department.
• With movies, TV programs and videos more readily accessible on mobile devices thanks to the expansion of Wi-Fi network, quality and screen size become essential.
Tablet, game console …
Embrace all screens
2 Elevate program content
• HKCTV’s most prominent advantage over the others is its well-established news channels. • Bid for exclusive rights to broadcast sports tournaments rationally. More dollars into producing high-quality self-made programs.•Fantastic Television – New free TV license. Purchase high-quality TV dramas from independent producers; Develop creative entertainment programs (e.g., reality talent shows) to grasp young audience market.
3 Enrich subscription flexibility
• HKSAR Govt : 1/5 of HK population were below poverty line in 2012
Flexible, scaled-back & cheaper subscription packages
• Advanced set-top box and the gradual move to IP will increase cable TV’s flexibility.
• HKCTV: 16 fix-priced TV subscription packages (14 to 83 channels).
4 Think forward to Over-the-Top
In the future, i-CABLE may consider
an ”if-you-can’t beat ‘em-join-’em’” approach in face of
OTT challenges.E.g., COX: started to provide video service on the internet from Jul. 2013.
The future of cable television lies in on-demand services delivered over
multiple platforms.
OTT providers still have several hurdles to jump before displacing
traditional pay TV.– they must offer live events and sports (Arker, 2010).
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