I have had the fortune to be living in France since before the Internet. I experienced the French triple-play phenomenon both as a customer and as a privileged industry insider.
One of the main promises IPTV made from thou outset was to bring a huge catalogue of on demand content, i.e. the VoD mantra we all believed in that would delinearise TV viewing in an eye-blink.
Orange was the only operator to go it alone and build a unified VoD environment from scratch, negotiating content directly – back in 2003 Hollywood studios were very condescending to operators and negotiators of the first hour often need to put their pride in their pockets.
Uncannily, Canal Plus forced Orange’s hand by acquiring their then VoD supplier (which is now called CanalPlay). With hindsight, although this was a good idea at the time, Canal Plus basically speared their main competitor into existence.
But early VoD take-up was excruciatingly disappointing and only France Telecom’s deep pockets managed to sustain the effort. Issues came from the technology and design (i.e. QoE and difficulty to navigate), and of course from the catalogue.
Now we’re almost eight years down the road. Orange still isn’t very transparent with the figures and the technology and navigation problems are still not all fixed. VoD obviously isn’t the paradigm shifting success once hoped for. However, at least it’s no longer a failure. Enough of Orange’s millions of IPTV subscribers consume VoD to keep the ball rolling and I believe actually turn a profit. The initial goal of reducing churn has been met.
But the other main players here in France, are even more opaque than Orange with real VoD ARPU. I can only surmise that, with the exception of adult content, this is because the figures are even less encouraging.
I have a simple explanation for this: The other major players like Free or Numericable have multiple VoD stores. They did not build their own deep catalogue and VoD brand, but instead gave their subscribers access to branded VoD stores like CanalPlay, M6 VoD etc. So if you are a customer of one of theses operators and want to watch a movie, you first need to decide where to go. To make things worse, prices aren’t identical; so you might even need to shop around. Believe me that’s not fun with a TV remote control.
The French content industry has awoken to this issue and discussions are underway so that some films at least, will be made available exclusively via one VoD provider who would then promote them more effectively. That might alleviate the pain, bit won't fix the core problem.
So where’s the link with cord cutting?
The parallel here is that if walled garden Pay-TV may be expensive and sometimes give a feeling of being penned in, cutting loose leaves you on your own to fend for yourself. Which service do you turn to for which type of content? A bit like which VoD store do you turn to when you’re a Free customer in France?
You might laugh at this thinking I've missed the point; arguing that say a Boxee box or an AppleTV will enable this new provider to deliver an all-in-one experience. You might be right, but by the time they reached that comfort zone of a truly lean back experience, you’ll be paying a bill very similar to a PayTV one.
Pay-TV operators have time, if they act now - no need to run, just be realistic - to open up to enough OTT content, while still delivering that all important lean-back experience. They may see numbers erode a bit, so maybe for example Sky's natural point of equilibrium is bellow the 10 million subscriber mark despite their beliefs.
I don’t know if Pay-TV will die in the end or if as News Corp’s Operating Chief would have it 'Cord-Cutting' is 'Flavour of the month. I do know that if Pay-TV operators play their cards right, many of us will still be paying our Pay-TV bills for a while yet.