We have no choice but to predict a financial bloodbath for the new GlobeCast SES pay TV service launched in Romania for Orange. That country needs yet another pay TV service like a hole in the head.
Romania is a poor country with 21.4 million people in around 6.7 million TV homes. There are already 5.4 million of these that have pay TV, leaving a market left to penetrate of some 17% or so.
But peculiar to all the highly penetrated pay TV markets in Europe this is the one with the lowest service pricing at around €12 per home per month. It has endured three years of price wars, and the launch by Orange is set to re-trigger a new price war.
But we’re not saying that there is not further appetite for pay TV in the region, as small cable companies like DCS, which at last count only had 180,000 customers, are still putting on new customers. The region is dominated by RCS&RDS, a cable service which is also delivered via Satellite, and which has around 2,6 million homes, or around 48% of the pay TV homes in play. All the outside companies see this as vulnerable.
Its great rival Liberty Global (trading there as UPC) has about 1.4 million homes, again across both cable and satellite, while Deutsche Telekom has bought into RomTelecom through its Greek OTE subsidiary and taken the market by storm, adding both DTH and IPTV lines at a phenomenal rate to get on terms with the other two, with around 1.4 million customers. Liberty Global has content buying power, and a technological edge on OTT; Deutsche has financial clout, while RCS&RDS is losing customers in a number of neighboring countries like the Czech Republic and is retrenching back to its native market.
But Orange plans to go ahead, presumably expecting the same kind of success that it has achieved in countries like Poland. But there Orange has the advantage of owning the local incumbent Telco, and has added TV over IPTV and satellite, even though it is up against rivals like UPC, as well Canal+ (owned by Vivendi and like CanalSat) and Cyfrowy Polsat, the local market leader with about 3.6 million DTH subscribers there and a 38% pay TV market share there.
Orange will do this through its GlobeCast satellite services subsidiary and use satellite delivery from SES. The idea is to use mostly HD channels, delivered in DVB-S2 format and compressed in H.264. GlobeCast will provide contribution, encryption and encoding, so will no doubt be delivering channels that it already carries for other players in other regions.
Jean-Francois Fallacher, Chief Executive Officer of Orange Romania, said: ‘Today Orange Romania is ready to provide high quality television services and to offer our Romanian customers truly attractive packages. Orange TV means the highest number of HD TV channels, the best satellite beam strength and coverage, dedicated customer care, multiscreen access and a smaller and more efficient dish.’
The edge Orange is hoping for is through its cellular subsidiary, so delivery of a multiscreen service to the smartphones which Orange Romania already owns is at the heart of the offer. Another key element will be the Orange owned channel DailyMotion.
This will be available on TV and computer, through satellite and to smartphones and tablets over internet. End-users get 40 HD channels, 26 of which are available for the first time in Romania in HD. Customers will be able to choose from three TV subscriptions, Local HD, World HD or Universe HD on 12 or 24 month contracts. Tariffs for two-year agreements start at €5 a month, with a special introductory discount to existing phone customers, of 30%, taking the price down to between €3.5 and €9.60 a month. During a promotion until 15 July, customers get voucher towards Samsung TV sets as well.