OTT does not offer a realistic rational alternative to established pay TV offerings and is unlikely to do so for some time, according to Brian Sullivan (pictured), CEO of Sky Deutschland.
Speaking on the CEO panel at the CTAM Europe EuroSummit in Barcelona, Sullivan said that Sky had embraced OTT as a distribution mechanism, which had attracted its offering to a younger audience. “That said, I have a very hard time understanding the economics of standalone OTT services. There are 62 in Germany…and most of them are running at eight-digit losses,” he said.
Sullivan added there is “absolutely no price elasticity whatsoever” in OTT and rising costs could not be compensated by higher consumer prices.
Sullivan said that “we’re fooling ourselves if we think there is enough bandwidth capacity” to support unlimited OTT.
Speaking on the same panel, Telenet CEO John Porter agreed and said that “free riders” were a problem for cable and that he considered bandwidth caps to be a growing necessity. Porter said he was confident that Telenet’s broadband and pricing strategy would act as a constraint on the ability of OTT services to make inroads in the Belgian market.
The Belgian cable operator has responded to challenges in the market by reducing the number of key product lines to six – two main TV offerings, two internet offerings and two telephony services, according to Porter.
Porter said that research had show customers for mobile were satisfied with two offerings and Telenet had applied this approach to broadband too. Telenet’s launch of two TV services – Rex and the higher tier Rio – had taken this approach to TV Porter said, adding that Telenet would continue to differentate itself in the entertainment space through the launch of applications and its TV everywhere offering.