TORONTO – Four traditional Canadian telcos which not that long ago had no TV subscribers now represent about 1.3 million Canadian subscription television customers.
A key reason behind that growth has been the offer of much more flexible packaging than what had been available from their cable and satellite competitors. While the telco TV companies’ cable competitors have made strides in that direction of late, it was the availability of smaller theme packs of specialty channels and some a-la-carte offerings that set the IPTV carriers apart from their more mature competition – who stuck with larger tiers for a long time.
The TV leaders from Telus, Bell Aliant, MTS and SaskTel are in Toronto this week to meet with their broadcasting partners and to talk about what’s working and what’s next. How many more Go apps are coming? New channels or multiplexes? New network technology?
Of the four presentations made Monday afternoon at Telus House in downtown Toronto, Greg McLaren, manager, content for MTS spoke most directly about the consumer advantages inherent in the smaller packages his company has been offering for years. His experience selling those, now along side many a-la-carte channels, shows the pick and pay fear felt by many – and expressed during the CRTC’s Let’s Talk TV hearing last month – may be unfounded.
McLaren said that while the relatively small packages of five channels for $3-$4 which MTS sells after customers buy basic “is contentious for some programmers… it’s much less contentious for our customers.” However, he also shared a glimpse of the company’s set top box aggregate data which revealed that this bundling works for customers – and that pick-and-pay doesn’t look to be the scary scenario some have fretted about.
He admitted that yes, “when consumers are given choice in TV packaging, they choose to buy less of the programming that was packaged in the old analog tiers.” McLaren worked for the old Videon Cable in Winnipeg before it was purchased by Shaw and he went to work for MTS – so he remembers the old days of cable.
“So, one of our biggest challenges has been balancing the needs of the programmers, which we recognize as genuine business needs, with the demands of consumers… In this, we see a role for pick and pay.”
MTS offers 72 channels on a pick and pay basis right now (most for $1.99 each), which is every channel whose owner allows it. The channels are also offered in the smaller theme groups, McLaren explained. However, despite stated consumer demand for a-la-carte, the penetration levels of pick and pay channels are very low – less than 1% for most, meaning customers still choose these channels in packages, seeing better value there than in buying them one at a time.
“We’re not so sure that a model where pick and pay sits below 1% foreshadows the end of life as we know it.” – Greg McLaren, MTS
“We think ($1.99) is a fair price and for all of the worry lines that have creased the industry’s forehead since last year’s throne speech, we’re not so sure that a model where pick and pay sits below 1% foreshadows the end of life as we know it.”
MTS uses sales as well as set top box data to inform itself about its packaging decisions where when one channel has a higher than expected a-la-carte penetration level, “if more customers are buying this service than any other as a pick and pay, maybe it’s in the wrong theme group,” he said.
“And if the set top box data show that this service is also the driver of that theme group, then perhaps it needs to be moved.”
McLaren also shed some more detailed light on set top data, what he called “tunership”, not viewership, because MTS has no way of knowing if people are actually watching what their set top box is tuned to. A recent three-month report saw the company’s 111,000 TV customers collectively watch 1.85 billion minutes – and the company broke down tunership among all of its many small theme groups of channels.
In one grouping, the five services in it show they relatively balanced for tuning, which is “a reasonable indication, we think, that we are not forcing our customers to buy programming services they don’t want to get ones they do want” in that particular pack.
In another, however, “there is a clear passenger with only 10% of the tuning of the highest service, the driver” he notes, which says to him “our customers are clearly being forced to buy a service they don’t want in order to buy the others they do want,” and that the company is looking to move that weaker one to another group.
While McLaren’s presentation didn’t name the channels, it did show that the data doesn’t lie.
