Orbit Showtime CEO Explains the Strategy Behind DTH Platform Combination

[Satellite News 12-07-09] In one of the biggest pay-TV consolidations of 2009, Middle East DTH platforms Showtime Arabia and Orbit merged in August to create Orbit Showtime. The platform, equally owned by the Orbit Group and the Kuwait Projects Company (KIPCO), aims to bring 75 premium channels from the Middle East and North Africa together on a single platform.
Orbit Showtime CEO Marc Antoine d’Halluin told Satellite News that the operator now is in better position to monetize digital TV markets across the region and explained why he believes the combination of DTH platforms in the Middle East makes sense.

Satellite News: Now that Showtime, which focused on international programming, and Orbit, which focused on local programming in the Middle East, have combined, will the new entity skew one way or the other in its business model?

d’Halluin: Orbit did put more focus on local, Arabic channels. The Showtime platform was maybe more focused on sports content. The result is that we are now very complementary, so we don’t want to skew it one way or the other now. We want to keep the diversity, which is a key selling position of the new platform. We have 75 channels on one smart card and one satellite, so we are able to cater to every subsector of our main market, and that is the local market in the [Arabian] Gulf, and appealing to all members of the family as well as the pan-regional dimension such as expatriates.

Satellite News: Why consolidate content in such a diverse region like the Middle East?

d’Halluin: The consolidation puts an end to an escalation of programming costs that became somewhat irrational and somewhat disconnected from the reality of the sizes of the business. It brings some common sense into the mix from every perspective, and in addition, the merged entity enables us to do a far better job in fighting piracy, which is one of our major challenges in the region. I think the latest technology available is better than ever for the benefit of the operators as opposed to the last five years having benefited the criminal pirate organizations, and I am confident we will be able to eradicate piracy.

Satellite News: Are there any significant integration issues between the different satellite networks?

d’Halluin: About four days after the closing, we illuminated most of the Orbit channels, which are on the Arabsat location at 25 degrees East, to two new transponders at a Nilesat/Noorsat 7 degrees East location. We used some of the Showtime capacity to be able to offer the full set of 75 channels at the 7 degrees East location, which is the permanent location of the new platform and the Orbit Showtime package. Since then, we have stopped selling channels on 25 degrees all together from that date. We have an Orbit legacy base, which we will gradually migrate to 7 degrees, which will take around 12 months achieve. We will do that in a gradual way, to make sure we don’t lose subscribers when we migrate them from one position to another.

Satellite News: Will you ultimately go under one brand?

d’Halluin: Right now, the brand is Orbit Showtime. The thinking behind that is that Orbit and Showtime are two of the most widely known consumer brands in the Middle East. They are over 15 years old. From our perspective, we don’t want to move away from these brands too quickly. We need to make people understand that these two brands are together, and that you get two for the price of one. That is the initial plan. How long this phase will be is difficult to tell. It is all about getting our subscribers to understand they get a lot more choice and double the amount of channels they had previously. It doesn’t prevent us from rationalizing any of the channels we produce.

Satellite News: When do you expect to launch HD services on the combined platform?

d’Halluin: We plan to deploy HD relatively soon, and our plans are to launch the services at the start of 2010. We will do this at the same time we start to rationalize our own channels, so we will be better positioned to capture the content that we have licensed under both entities under one umbrella of channel names. With the launch of the new HD channels we will launch a new HD box. We need to bring HD decoders into the market. We will deploy HD boxes at the beginning of next year. The new technology and bringing HD into the market is a key turning point for us, as we can hopefully deal with the piracy problem better as well as give better content options to our customers. We have not decided on the supplier of these boxes. We expect to make a decision on this in the next few weeks.

Satellite News: Will you look to make changes in terms of your content security provider?

d’Halluin: We are reviewing all options. Essentially, what matters is that in the future is that we have the right boxes. We all know that the DVB standard has been cracked whatever the [conditional access] systems have been used. There were weaknesses in this standard. The secure silicon chips which are now being deployed across all platforms internationally make it a lot more efficient to fight, what we call “control word sharing” type of piracy, which is our main enemy in the Gulf. That is where our focus is.

Satellite News: A lot of satellite pay-TV operators are adopting hybrid strategies now and looking to bring content over broadcast as well as IP. Is this the direction that Orbit Showtime is headed in?

d’Halluin: We will work with IPTV operators, but I don’t think we will work in a hybrid way. I think we will work in two different segments of the market. In the context of the Middle East, where the market is a DTH one, the hybrid element is a little less relevant than it is in other markets. The most important thing for us is to deploy a secure platform. What is interesting, from the Showtime perspective, is that we have developed a push subscription video-on-demand offer via satellite, including movies and series in our PVR box. We intend to roll this out in a far more aggressive way in the HD dimension, with the better aspects of having HD content available. This will come very soon. This makes it an interesting approach for a DTH platform in the region like us.

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