Broadband Internet and smartphones have transformed the way video content is being consumed: it’s moving online. It’s also moving to mobile, especially for younger generations who have grown up with broadband, social media, and smart devices. This phenomenon has forced video content distribution businesses to adapt. We now hear about “skinny bundles” from multichannel video program distributors (MVPDs) — a trimmed down TV channel program bundle that only includes local over-the-air channels and a dozen more of your choice — like the “skinny bundles” offered by Comcast or Verizon FiOS. Consumers may even be able to swap channels after a certain period of time, and it’s all for a fraction of the monthly bill offered today for 500-channel packages.
Cablevision Systems, a cable operator servicing the New York metro region, recently announced its “Cord Cutter” package, a video package based on HDTV antennas that transmits basic TV with local over-the-air channels and Over-The-Top (OTT) content (ie Netflix, Hulu, and Sling TV), for $39 a month, which can also be bundled with high-speed data for $45 a month. It’s built for people who would probably never sign up for a fat cable TV package that can cost upwards of $100 a month.
Recent announcements from some fast-moving cable operators offering OTT content from Hulu and Netflix from their set-top box services or subscription services to OTT is another testament to these business model changes. The skinny bundle, the cord-cutter bundle, or whatever they are called, reflects the trend that service providers are adopting to meet consumer demand. Some time ago, some people claimed that à la carte TV programming would never happen. Well, it’s happening.
What does all this mean for service providers? A flexible service activation platform that can activate and support flexible bundles — including promotions and consumer self-selected services — becomes critical. The new business model challenges the traditional service fulfillment process, from back-office service order orchestration to field workforce management. It calls for a fast, reliable, and flexible platform to enable service delivery. Easy installations, even self-installations, are essential to get high-quality services up and running quickly.
And this is not just a North American phenomenon. This trend is indeed global. Internet speed and bandwidth are still at the center of service providers’ attention. It’s now more about networks converging, convergent services across all network types — HFC, DSL, Mobile, WiFi, FTTH — and the bandwidth and speed required to ensure that consumers receive their services. The connectivity part of facilities-based services is always going to be there, but, the services riding through connectivity “pipes” are even more important. The search for innovative business models is universal. It’s all about how to better serve consumers who are at home in front of the television, with their iPad on the go, with their smartphones in the mall, and so on. Consistent, unified user experience backed by excellent support service is what makes a brand stand out.
I won't be surprised in a few years’ time when today’s cable operators become more like the nemeses they love to hate — the OTT players. IP delivery of video content will one day become the dominant form of content delivery. Indeed, OTT wouldn’t be so OTT any more — it will be mainstream.
A version of this post appeared on www.incognito.com/blog. Incognito Software Inc. is a Volaris Group company.
David Nyland is a Portfolio Manager and President of the Volaris Communications & Media Industry Group. He began his career as a software developer at a Tier 1 systems integrator, and quickly moved into entrepreneurial roles at 2 telecommunications software start-ups which scaled and were sold to strategic acquirers. Since then David has been CEO of 2 companies, a public company with global scale, and a VC-funded private business, during which he completed acquisitions of businesses in North America and Europe. David joined Volaris in 2013 to build a Communications and Media portfolio for Volaris, and has since completed numerous acquisitions worldwide including in Canada, Sweden, US, Switzerland, and Singapore. David has a passion for software and telecommunications technology and building synergistic businesses that scale profitably. His goal is to develop a strong synergistic portfolio of companies and hold them forever.
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