BT Stumbles Into Video World
BT Group plc (NYSE: BT; London: BTA) has entered the video services market with the launch of a movie download service in partnership with NBC Universal . (See BT Strikes NBC Universal Deal.)
"From 31st July 2006, you'll be able to get your favourite films downloaded and delivered to your home all for one great price. Watch this space!" says the operator's Website.
This isn't BT's anticipated full foray into the IPTV market, though, as the carrier is simply making movies available for legal download, and any U.K. broadband users, whether BT customers or not, can use the service.
But there appears to be a hiccup.
Although today (Monday) is launch day, the service isn't available. BT hasn't yet returned our calls about the service, while NBC Universal, after making some hasty checks, said it would "most likely go live some time after 5 p.m." Welcome to the late show…
When it does become available, the new service will allow consumers to download NBC Universal films -- such as Inside Man, King Kong, Jarhead, and American Dreamz -- to own and store in two digital formats, one for a PC/laptop and one for a portable device. For a limited time, BT is also sending customers a regular DVD disc version of the movie through the snail-mail.
Prices will be revealed at the same time as the movies become available, though the carrier noted during last week's earnings presentation that the cheapest will be £7.99 ($14.91).
BT reckons its key selling point here is timing, as its new service will shorten the time between a movie's cinema release and its availability for home viewing. That's because it will offer NBC Universal's movies to customers at the same time as they become available from DVD rental stores and before they become available as pay-per-view (PPV) content from key broadband and entertainment service rivals, cable operator ntl group ltd. (Nasdaq: NTLI) and satellite giant Sky . (See NTL Rolls Out 4-Service Package and Sky's Free Broadband Play.)
That's an important point when the content partner is one of the major Hollywood studios with mind-numbing crap like Miami Vice, You, Me and Dupree, and The Break Up heading towards British eyeballs.
That immediate post-cinema slot gives BT an edge, reckons Ovum Ltd. analyst Mike Cansfield. "By becoming part of the second window, BT will inevitably take revenues from the PPV window and render cable and digital satellite offers less compelling, because BT will have the rights earlier in the product lifecycle. This is a clear potential winner for BT," states the analyst in a research note.
But the analyst doesn't believe this will lead to a greater aggregate spending on such entertainment. "We think this will cannibalize and fragment the industry, rather than add more revenues to it, albeit that this may be to the benefit of both BT and Universal," reckons Cansfield.
The move preempts BT Vision's full IPTV service, which will be launched some time in the coming months and be available only to BT broadband customers, of which there are currently about 2.9 million. (See BT Unveils IPTV Service.)
To get the full service, customers will need a set-top box from Royal Philips Electronics N.V. (NYSE: PHG; Amsterdam: PHI) as well as the carrier's home gateway, called BT Hub. Microsoft Corp. (Nasdaq: MSFT) is providing the video server, digital rights, and middleware/programming guide capabilities. Again, prices for the hardware and installation are currently under wraps. (See BT Picks Philips Set Top Boxes, BT Gets a Gateway, and Microsoft Wins at BT.)
The full BT Vision service includes more than 30 free-to-air digital TV channels, though these aren't streamed across BT's broadband network. Instead, they come via a standard TV aerial, which feeds into the Philips BT Vision set-top box.
BT Vision subscribers can supplement those free channels by paying for additional programming –- including movies, kids' and comedy shows, music, "catch-up TV" and, from August 2007, near-live English Premiership League soccer matches –- on a subscription or pay-as-you-use basis. The carrier has struck a number of content deals to provide the additional programming. (See BT Strikes Content Deal , BT Wins Soccer Deal, BT Snags DreamWorks Content, BT to Offer Gigs on VOD, BT Strikes Cartoon Deal , BT Strikes IPTV Content Deals, and BT Touts Next-Gen Services.)
Delivering the services in this way means BT doesn't need to clog up its broadband network with multicast TV streams, and can concentrate on delivering high-quality, unicast, on-demand services.
Getting the full service up and running quickly is important for the incumbent, as broadband is the major battleground for the major service providers. And while BT Retail is the single biggest provider of consumer broadband in the U.K., the carrier needs something different to counter the high-profile "free broadband" offers that are starting to proliferate in the U.K., and the impending introduction of Vodafone Group plc (NYSE: VOD) and Telefónica Europe plc (O2) -- now part of Telefónica SA (NYSE: TEF) -- into the fixed consumer broadband sector. (See Orange Juices Free Broadband Battle, Free Broadband Comes to the UK, Telefónica Buys Be, and Vodafone Unveils Convergence Plans.)
— Ray Le Maistre, International News Editor, Light Reading