If you think that cloud DVR service can't make much of an impact on the pay-TV landscape, then take a good look at Spain.
Over the past 21 months, Telefónica has climbed to the top of the charts in the Spanish pay-TV market, thanks at least in some measure to its rollout of network DVR service. In fact, the telco IPTV operator now boasts more than 2 million video customers in its home country, having nearly tripled its video subscriber total since launching its new cloud-based service in December. That puts Telefónica ahead of its four closest pay-TV rivals in Spain, which include the nation's biggest cable operator, ONO , Digital+, Orange Spain and GoTV.
Besides attracting new customers to its IPTV platform, Telefónica has also generated great enthusiasm among its subscribers with its cloud DVR offering, as detailed in a new white paper produced by Heavy Reading and sponsored by Alcatel-Lucent (NYSE: ALU). In February, the latest month for which figures are available, the IPTV operator reported that its number of cloud DVR users had actually quadrupled over the previous four months. As a result, nearly half of its video subscribers were already using the service a little more than a year after it was introduced.
"Cloud DVR has been one of the building blocks of our market proposition and certainly our most successful service on IPTV so far," Roberto Porras, brand manager of Moviestar TV for Telefónica, told Heavy Reading for the paper. "It's one of the most used features by our customers."
Plus, in a survey conducted by Telefónica, an impressive 80% of its network DVR users said they were tapping into the service "very often." How many other pay-TV providers can claim that kind of frequent usage for one of their new video services or applications?
"It's a big jump," Porras said. "We couldn't have imagined that incredible increase in usage in a few months' time."
Like Comcast Corp. (Nasdaq: CMCSA, CMCSK) in the US, Telefónica does not charge video subscribers anything extra for its cloud DVR service. Instead, it bundles the service as part of two bigger Moviestar TV content and communications services bundles, one that costs €65 ($73.37) a month and comes with 50 hours of storage and a bigger package that costs €73 ($82.40) a month and comes with a whopping 350 hours of storage.
Telefónica does not break down how many subscribers take the cheaper Moviestar TV package and how many take the pricier option. But it seems pretty clear that both bundles, aided by the popular new cloud DVR service, are finding their mark.
Porras credits the initial success of the network DVR offering to several factors, including its "accessibility," flexibility, new user interface and much lower capital costs. By relying on the cloud to do the heavy lifting, Telefónica can beam the service to all its video subscribers without needing to install new set-top boxes or upgrade their current set-tops. It can also add new features and make other service changes much quicker than before, when it offered a traditional set-top-based DVR service.
Like Comcast,Telefónica has no plans to monetize its basic cloud DVR service directly, at least not yet. But, with its overall video subscriber numbers soaring, the Spanish IPTV provider appears pretty content right now.
In a sign of its satisfaction, Telefónica introduced a more advanced cloud DVR service, called Cloud Catchup, in April. This premium service automatically records all programming on all TV channels over a seven-day period. So customers can catch up with any shows they may have missed over the last week.
In the white paper detailing Telefónica's rollout, Heavy Reading offers up a number of tips for other service providers thinking about launching their own cloud DVR services. The list is too long to go through here. But, if nothing else, Telefonica's early success proves one point -- it can pay to have your head in the clouds.
— Alan Breznick, Cable/Video Practice Leader, Light Reading