10 September 2011

Platforms not keen to create walled gardens separate from the internet

Liberty Global's President and CEO, Mike Fries, says the cable operator's new Horizon media gateway is a "game changer" for the company, even in markets as hard to crack for pay TV as Germany.

Fries sees the new platform - call it a 'set-top box' at your peril - as both a retention tool and a new source of revenue from subscribers. "It's a very powerful platform and an amazing user experience," said Fries at the onstage demo of the new product at IBC.

Importantly, the new Horizon platform, which will be rolled out starting in the Netherlands and then in Switzerland and Germany, will not cost consumers a fortune. "There will be a modest cost like an installation fee for the box, and access to the iPad app will be free to our digital cable customers."

Liberty's multimillion dollar bet on Horizon is an important step for the cable company to address the three things that Fries admitted cable does not do so well: not allowing its subscribers to share content; not integrating other, non-cable content, and the overall user experience.

Andrew Barron, COO of Virgin Media, said that the UK cable operator's TiVo box is also designed to bring both IP content and TV content together into one box, adding that since the introduction of the TiVo box the cabler has received accolades as the best new product launch in the UK in the last year.

Both Fries and Barron said that they are keen not to create a walled garden of content that is separated from the internet. Asked if Liberty would add over-the-top services like Netflix to its Horizon offer, Fries said: "I'm open-minded. The main goal is to keep consumers connected to our networks and our environment. But I don't think we can pretend people aren't going to want an over-the-top movie service." However, it is clear that Fries hopes that Liberty won't have to integrate services like Netflix into the Horizon environment.

Virgin Media's Barron went a step further, saying that his company already integrates the BBC iPlayer into its TiVo service to great success has added internet music service Spotify, and is "in talks with Netflix". Barron said: "We are on a path to embrace and incorporate as much that third parties will provide as the platform develops. There are issues like child protection so you can't throw the doors of the internet wide open and put that on people's TV sets overnight, but you can philosophically say this is not about the walled garden."

Fries said that Horizon is about "stabilising" Liberty's average revenue per subscriber (ARPU) and "growing a little bit". The point is that Liberty in Europe has 16 million cable homes but only 7 million are digital, and average ARPU is 15 a month. "This is about driving customer ARPU, not unit cable custo mer numbers," said Fries. "We won't be charging much more than we charge our digital subscribers now so why wouldn't you go for it?"