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Zattoo buddies up to Sky, Android TV – glazing over Magine buy

Swiss internet TV provider Zattoo has emerged from hibernation after digesting its meal of rival Magine TV earlier this year to announce two significant integrations at Anga Com – paying homage to the technical progress of Android TV Operator Tier and Sky Deutschland. Zattoo’s double dose of integrations accentuates the B2B business and reiterates our point that the company’s B2B technology looks better positioned to thrive than its B2C unit, which made the purchase of the consumer-facing arm of Magine TV arm all the more peculiar.

To Sky Deutschland first, with Zattoo integrating the operator’s pay TV platform into its white label platform for IPTV operators – claiming to be the first and only TVaaS vendor offering this integration to operators. For Sky, the integration should give the Comcast-owned company a taste of the freelance lifestyle in anticipation of cutting its own satellite links in future, monitoring viewing activity and behaviors, while providing additional routes to market for its channels and services. This is a smart move from Zattoo, buddying up to a pay TV operator not averse to change but in fact quite the opposite – one which is instead embracing OTT video and making the technological investments to match these grand ambitions. And that was before its takeover by a US behemoth.

Collateral damage is limited down the chain however as Sky famously manufactures set tops via its own subsidiary, so the move won’t immediately hit set top vendors and Sky can make cost savings accordingly, although the operator’s influence will eventually ripple out to the wider set top hardware market.

Existing operator customers of Zattoo like NetCologne, EWE TEL and M-net can now offer Sky channels to customers including high-demand premium sports content, improving the appeal of their branding on the white label platform while also making Zattoo a much more desirable option for network operators investigating TVaaS. Zattoo says all Sky channels are transcoded, encoded and protected via multi-DRM in the Zattoo back-end and can be played out directly over an operator’s own network – without any additional smartcard or CI+ modules.

Zattoo has built up its end-to-end platform over the last decade, replacing CDN distribution with direct network peering that allows for a managed quality distribution of the video streams – which it calls Unicast IPTV. Yet Zattoo has confessed to us in the past that OTT video delivery through a top CDN provider is a “compelling alternative”, and we know its P2P technology also enables geographic targeting of users for advertisers.

Add to that the X-factor of Android TV operator tier, which really speaks for itself by now as a viable technology, and Zattoo has really made its mark this week. The vendor has added an application for set tops based on Operator Tier to its white label platform, and with its existing solid position among smaller operators in Europe, the Swiss firm should see instant interest – claiming a “leading” European operator will be going live with an Android TV Operator Tier deployment powered by Zattoo “very soon”. International expansion is also high on the company’s agenda.

“End customers expect a growing number of new TV functionalities these days. At the same time, the hardware is becoming increasingly complex to meet higher standards, and network operators are facing more and more security requirements,” said Gernot Jaeger, Chief Officer B2B at Zattoo.

But what about the B2C business we mentioned earlier? Zattoo is yet to provide an update since its acquisition of cloud-based OTT firm Magine TV in January, although we put our neck on the line from the get-go by predicting Zattoo might absorb the technology and other assets, before eventually cutting off the consumer-facing unit. We say this simply because Magine TV was strongly pitted as a Netflix killer and predictably did not achieve anything close.

That said, previous estimates have shown Zattoo at around 550,000 active subscribers paying €9.99 a month, as well as 34 million monthly views on the ad-supported tier, as of a couple of years ago, but we now believe the paid subscriber figure to actually be something closer to 170,000 – following the pulling of its direct to consumer operations from the UK, Spain and Denmark about a year ago.

Clearly there have been some challenges, but our numbers show Zattoo growing by around 10,000 subscribers a year in Germany and Switzerland, its two remaining markets, so it might not be all doom and gloom for Zattoo and inheriting Magine TV’s B2C business means one less competitor on the market.

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