Vodafone UK’s Shelved Broadband Pay TV Ambition Costing it Millions
The recent decision by Vodafone to shelve their plans for launching a broadband based Pay TV service in the United Kingdom (here) looks set to cost the operator millions of pounds, due to the early termination of contracts for premium TV content and channels.
According to The Telegraph, sources at multiple different broadcasters claim that Vodafone had signed related TV content / channel contracts and many of these were for 3-year terms. However the somewhat 11th hour decision not to proceed with their product launch means that the operator will face penalties for breaking those agreements early (this is the second time that Vodafone has abandoned a proposed IPTV service in the UK).
The news appears to confirm that Vodafone’s decision to shelve the service is more than a temporary pause. However the recent rumours of fresh talks over an asset swap or merger with cable operator Virgin Media (here) could be one way for them to re-enter the market, without having to renegotiate the same TV agreements. But for now the operator will have to remain a triple-play provider, while it tries to figure out what to do next in the UK.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, Google+, Facebook and Linkedin.
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“I used to be indecisive, but now I’m not so sure.” (Alan Partridge)
Pretty sure that one predates Alan. I’ve been using it for decades. 😉
With an ever converging market, Vodafone remaining as a triple-play provider surely has to put them at a disadvantage compared to BT, Sky and Virgin.
There must surely be a market for a decent video-on-demand provider.
I don’t mean Netflix with its catalogue of mostly “50p in the bargain bin on the way out of the shop” content, nor Amazon Prime with a few decent series.
I mean a platform with a wealth of content, access to most TV shows from all time, all the latest blockbusters, and so on. Nothing like this exists.
Since “content is king” while it would be hard to make a dent in the infra market, it can’t be hard (comparatively) to do the same in the content market.
Perhaps Vodafone might win the long game.
I’m sure Sky and Virgin Media’s top most expensive TV packages come close to that but how many people want to pay through the nose for access to so much content all at once, most of which they’ll never watch. The video on demand generation is making it more challenging to sell content based around the old models. Users can now be more selective with their viewing.
In this emergent market, if you want access to certain shows, you might find yourself having to pay multiple subscriptions to multiple services with multiple boxes.
I’m also thinking of the “library” aspect. Box-sets are all the rage. There’s a wealth of superb content for which you currently have little choice but to order the DVD and wait for it to arrive.
Netflix might be “built in” to the Sky and VM boxes (it might not be, I don’t have them, but assuming they are) but if there’s a new player who can do what they and Amazon/Now do, and more, for one monthly fee (benefit of consolidation, single platform, one bit of kit) and with one box, that player could well triumph. Maybe very quickly.
This would mean that infra and content are not tied together by any means. All the infra providers could end up chasing the third party for access and integration and finding what they invested in died a death.
Unless one of them comes up with this thing by themselves. Maybe Vodafone have seen the price tag attached to the development of such a platform that isn’t simply “another me-too box to put next to the TV”?
The problem is getting people to pay for the content which is already freely available via “kodi boxes” to anyone who wants it.
@DTMark – the content market is probably harder than you think and costly! All the different content providers, with different costs and rules on how content can be used and for how long it can be kept etc. make this a tricky proposition. I imagine Vodafone would need a ‘critical mass’ of content to make the proposition work. Maybe they couldn’t get enough interest/agreement?
I’ve long said they should just buy TalkTalk
Vodafone & Virgin media will merge. its the only way both can compete against sky and BT.