[Satellite Today – 07-03-08] Unitymedia, a relatively small player in the German satellite pay-TV market, is making a big impact as it begins to challenge well-established Premiere.
    Unity is a prime example of a new phase of competition and choice being introduced in major markets throughout Europe, where low-cost digital/pay-TV alternatives are beginning to emerge. Unity has added satellite TV services under the name ArenaSat, to go along with its cable pay-TV offering and at the end of March had attracted 335,000 subscribers to its satellite platform.
    ArenaSat was launched in 2006 on the strength of a deal to broadcast German football games live but has since been about making the transition to offering a wider range of entertainment services. The platform today includes 21 channels, and only 10 percent of ArenaSat’s gross additions today are mainly attracted by the sports offerings.
    In an interview to Satellite News, David McGowan, managing director of ArenaSat, discussed the development of the satellite platform and why he thinks it can make a real impact in Germany.

Satellite News: Unitymedia is a well- known cable player. Why do you think you need a satellite platform?

McGowan: We would not have launched the satellite platform without the spur of needing to exploit the Bundesliga rights, however, satellite does a lot of things for us in addition to earning EBITDA. First, it allows Unitymedia to punch above its weight in terms of content providers. We have hundreds of thousands of subscribers more, so it gives us more weight in those discussions than if we were a cable operator alone. It also allows us to operate outside of our footprint. With cable, we are limited to certain geographies. This gives us a more national presence.

Satellite News: How do you view the prospects for an alternative satellite platform in Germany?

McGowan: I think there is a good opportunity for a satellite platform here. Premiere’s market domination and premium positioning clearly opened the door for an alternative offering which is less expensive, less complicated to access and has an overall easier, more consumer-friendly approach. We don’t believe in exclusivity, but in fact today we offer many strong channels that are not available anywhere else on satellite. This approach has been successful both on our ArenaSat platform and on the Unitymedia cable platform.

Satellite News: How big is the addressable target market for ArenaSat?

McGowan: In Germany, cable has around 55 percent of the market. There is a large part of the market we can address. About half of the subscribers we attract now don’t need a new box. They have one already. A lot of the boxes available in the market have Cryptoworks [conditional] access in them, which makes them ArenaSat- compatible.


Satellite News: How many channels do you hope to add to the platform in the next 12 months?

McGowan: I would say there are not a large number of channels that we don’t carry that we are think are, but we are certainly looking at adding some more channels later this year. … We think keeping the offer simple is one of our fundamental assets. We may add a premium tier at some point if we think it will help us boost profits.

Satellite News: Do you think Premiere has underperformed in the pay-TV market?

McGowan: I would not say necessarily they have underperformed, but I would say Premiere’s pursuit of distributing channels exclusively at all costs has not helped the overall market grow. We recognize that channels, whether they be the History channel or MTV or other channels, need to be distributed by multiple platforms in order to build their business. If they are only offered by one provider, it is difficult for that to happen. We need to grow the entire pay-TV space in order to grow this business.

Satellite News: What is your strategy for adding high-end services to your offering?

McGowan: We are looking at a range of options from PVRs (personal video recorders) to other technologies. We cannot make any promises, but we are in discussions with the vendors. However, ArenaSat is positioned as easy, accessible and simple, and we have to make sure to keep it this way. The interesting thing about the German market is that the [set-top box] market is as not as controlled by the platform operators as it is in other markets. The nice thing for the [conditional access] system we use is that it is pretty widely available off the shelf in this market. You can buy ArenaSat box in retail stores. It is not like in other markets where operators are forced to go out and buy millions of PVR boxes and then distribute them themselves. We are in a good position not having to control that part of the market.

Satellite News: Are you thinking of launching high-definition (HD) services in Germany any time soon?

McGowan: Premiere has already launched HD services. They have not been too successful. I think HD has not been a huge driver in Europe, particularly if you compare it to the [United States]. … There will be some demand. We don’t think it is enough to drive a separate HD offering at this point, but we have our eye on it.

Satellite News: What role do you see satellite playing in the German digital TV market as a whole?

McGowan: I think satellite will always be an important part of the market. I don’t think it will necessarily steal a lot of customers from cable, but it is a very efficient means of providing television. I think it will continue play that role. I think there will be more innovations from satellite. We are not a triple-play provider, unlike say cable or IPTV providers, however, that means we are able to have a special focus on television.

Satellite News: Is not having a triple-play offering a major problem?

McGowan: For an alternative, low entry-level satellite platform like us, it is really not an issue. It is perhaps more of an issue for Premiere, as a premium-price TV provider, to be able to tap the growth potential of triple play offerings.