Ever heard of a white label DTH platform?
Well, neither had I until recently, and I received a comprehensive explanation earlier this week at the Digital TV in CEE conference in Krakow.
Put simply, such a platform is one whose operator provides its services to third parties with no risk to either itself or those parties. It is being adopted by the Bulgarian company Neterra, which plans to launch a “shared platform” named W1 and distributed via Telenor Satellite Broadcasting’s Thor 6 satellites.
Speaking at the conference, Neven Dilkov, MD Neterra, argued strongly in favour of such a platform, citing the example of Bulgaria, where 1,000 registered cablecos and other companies currently sell TV services. However, they include only two DTH operators, with a third having recently closed.
The latter figure is not surprising, given the high costs involved in setting up a DTH platform. Aside from a few million euros on digital headends and other equipment, they include long-term contracts with satellite operators that can amount to between €5 million and €10 million a year.
It is also important to note that from a customer perspective, certainly in Bulgaria but also in most other markets, at least in the CEE region, it is hard to differentiate between the services on offer. Over 90% carry the same channels, while operators have to make do with a modest ARPU of only around €5.
Given this state of affairs, the question is: why not share? There are obvious competition concerns and a lack of trust that Dilkov said are hard to overcome. But the economics behind a white label DTH platform look like a non-brainer: in the case of Neterra it is asking its customers to only pay them for the number of subscribers they sell the service to.
Also, the business model offers positive cash flow from the onset, which is unheard of in the satellite TV industry.
Perhaps the most compelling statistics Dilkov quoted were the breakeven subscriber total of 200,000 for DTH platforms in the region and that it could be reduced to 50,000-70,000 with the adoption of a white label service.
Clearly the Bulgarian platform operated by Neterra will be aimed exclusively at the local market. However, if it works others in the region will no doubt sit up and take notice, perhaps even go on to set up similar white label DTH platforms in their own respective territories.
This is indeed a fascinating time for the TV industry in Bulgaria, and in particular its DTH market.
