The impending launch by Netflix in the Netherlands has galvanized the country’s leading broadcasters and pay-TV operators into stepping up their on-demand and online activities. The most direct response has come from broadcaster RTL Netherlands in acquiring Dutch VoD (Video on Demand) service Videoland, so that it can compete against Netflix in subscription VoD. RTL Netherlands has announced it has bought 65 percent of Videoland’s parent firm The Entertainment Group (TEG), with RTL CEO Bert Habets commenting that the deal was a “logical next step in the development of our on-demand TV offering.”
Under the agreement, which comes just before Netflix’s Dutch launch expected this quarter, TEG will continue operating independently. However, RTL will exploit the pay-per-view Videoland service in the launch of an all-inclusive subscription service of its own later in the year, possibly around the time of IBC, which is held in the country. This will provide unlimited access to international and Dutch movies and series for a fixed monthly fee.
TEG has contracts with major studios and smaller independent ones, claiming to be the largest provider of online movie content in the Benelux region, which also includes Belgium and Luxembourg.
The Netflix arrival will also be disruptive for pay TV, with operators responding by accelerating their multiscreen strategies. For cable operator UPC Netherlands — part of the Liberty Global group with operations in 11 other European countries including Germany, the UK, Switzerland and Poland — this strategy revolves around its hybrid Horizon platform that was launched in the Netherlands at IBC 2012 and is going to be rolled out in its remaining territories. Liberty Global has taken a key step in competing with emerging OTT competition including Netflix by announcing preparations to take Horizon up into the cloud, which will make it easier to support multiscreen extensions outside the home. Inside the home, Horizon will deliver content directly to connected devices either via Wi-Fi, or failing that, coaxial cable using the MOCA standard.
Liberty Global CEO Mike Fries said recently during an investor call, “Last week we had a demo in our office in London of a cloud-based version of Horizon. We will have a ready-to-launch cloud-based version of the user interface which will make future releases simpler and that will reduce the costs of the box.” Horizon TV had more than 270,000 subscribers in total by the end of July 2013, 185,000 in the Netherlands and 85,000 in Switzerland, the two countries it has so far been launched in. Fries announced that a German launch is planned for early September, followed by Ireland.
Few if any MSOs have yet considered ditching their set top boxes entirely, and Liberty Global does not intend to do so. According to the group’s Chief Architect Faycal Amrani, Liberty Global will adopt a hybrid approach with a gateway in the premise operating as a kind of mini IP headend serving content to all devices in the home, including the TV. Like other MSOs, Liberty Global fears that it would be difficult to maintain a high quality of service at all times without a box in the premise as a staging point for monitoring and troubleshooting. “If you don’t get the customer management experience right you don’t get anything right, so you must get some intelligence into the device so you can manage the increasing complexity in the home,” said Amrani at the recent CSI Multimedia Home Gateways Conference.
Meanwhile Telco KPN, now the number two Dutch pay-TV operator with around 1.15 million customers for its IPTV services, is also focusing hard on customer experience to repel the Netflix threat. KPN’s strategy is to build out fiber and reach as many homes as possible with full FTTH broadband, which is cost effective in a small, densely populated country like the Netherlands where most of the population can be reached relatively easily, as it already has been with coax cable. KPN’s belief is that the best way to see off OTT competition is to enable the highest quality of service with multichannel HD, as well as being early to deliver content at higher resolutions as it becomes available.
KPN has pursued its FTTH rollout with the help of acquisition, taking over four fiber service providers owned by Reggefiber and Reggeborgh. In concert with the fiber rollout, KPN is deploying VDSL to serve homes that will not be directly connected to fiber over the next two to three years. The aim is take 45 percent of the broadband market by 2015 and differentiate its TV service in terms of quality from rival pay-TV operators as well as OTT providers.
The only caveat here is that OTT providers themselves will also be able to take advantage of the higher broadband speeds.