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BT’s Vision for TV: A Tough Call at This Point| December 4, 2006 | Business Telecom Services - Europe
| Competitive Intelligence Report | Analyst: Sandra O'Boyle
Current Perspective: Neutral
On December 4th BT launched its long-awaited television service called BT Vision. The service combines 40 Freeview digital TV channels, a library of video-on-demand (VoD) content and a replay TV service. The service does not require a regular monthly subscription. BT Vision is delivered through a new set-top box, which is being offered free to new and existing BT broadband customers. This contains a personal video recorder (PVR) able to store up to 80 hours of content, pause or rewind live TV and record programmes. The box is also HD-ready. Analytical Summary • Current Perspective: Neutral on BT Vision, because BT has taken a relatively conservative approach to BT Vision and it is too early to tell if there is sufficient appetite for the service. BT Vision does not offer streams of hundreds of Internet TV channels and programmes over broadband, but instead combines Freeview, a free-to-air digital TV service, with an extensive pay-per-view VoD library of content. This approach lets BT dip its telco toes into TV waters without betting the bank, but the downside is the service is unlikely to stir up excitement in the market. • Vendor Importance: Very high to BT, because BT Vision has been a work in progress for several years now and former media executives have worked hard to sign impressive content deals for BT with Hollywood heavyweights such as Disney, DreamWorks, Sony BMG, Warner, Paramount, etc. BT views TV as key to keeping its broadband customers, driving additional revenues and fending off competitors such as Virgin Media (formerly ntl:Telewest), BSkyB, Orange, and Carphone Warehouse. • Market Impact: Moderate on the UK broadband market, because BT Vision offers BT broadband customers an extensive VoD library without a monthly subscription, and it provides a selling point for BT compared to basic access providers. However, there is nothing that screams “I have to have it” about BT Vision at this stage, and Sky will not feel threatened in the pay-to-watch-sports TV market. Recommended Competitor Actions • Competitors can point out that, for telcos such as BT, the mindset change needed to make the leap from connectivity to entertainment and TV services is sizeable. BT Vision has some attractive pay-per-view content, but it is not the killer service that will really trouble formidable competition from experienced TV and broadband service providers such as Virgin Media (ntl:Telewest) and BSkyB. • Virgin Media (ntl:Telewest) should promote its experience in providing television services and its better understanding of content both on the mobile and home fronts. Virgin Media can play up its attractive bundled services across broadband up to 10 Mbps, a free set-top box, Virgin Mobile services, flat-rate fixed telephony and access to a much broader range of TV packages than BT, including Freeview, over 100 digital TV channels and VoD content. • BSkyB can highlight that it offers free broadband up to 2 Mbps to Sky TV customers and point out that, while BT is saying there is no upfront subscription fee with BT Vision, customers still have to pay between GBP 17.99 and GBP 26.99 for BT Broadband in addition to pay-per-view charges.
Recommended End User / Customer Actions • BT broadband customers that want occasional premium content for a good value and a free personal video recorder should consider BT Vision. However, before signing up for any service, customers should do their homework and question BT on contract terms. Business Telecom Services - Europe
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