Technology

Netflix dominating the subscription video-on-demand (SVOD) subscribers market

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NEW DELHI:The Telecom Regulatory Authority of India (TRAI) seems to be getting hyperactive. Just like its head the ever so aggressive Rahul Khullar.

In the past month or so it has been releasing consultation papers and regulations like it is in a hurry. Today, it released another two draft regulations. Both relate to the interconnection agreements that broadcasters sign with distributors such as Cable TV, DTH and IPTV operators.

Entitled the "Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) (Second Amendment) Regulations, 2013" and the draft "Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff (Second Amendment) Order 2013," they seek to amend some regulations that TRAI had passed earlier in relation to tariffs and interconnect agreements in earlier years. (Earlier, TRAI had notified the Interconnection Regulations for DAS dated 30 April 2012 as amended on 14 May last year and the Tariff Order applicable for the Addressable Systems dated 21 July 2010 as amended on 30 April last year).

The amendments it has proposed state:

* Multi system operators (MSOs) cannot seeks signals of a particular TV channel from a broadcaster under ?must provide? clause while at the same time demanding carriage fee for carrying that channel on its distribution platform.

* No minimum channel carrying capacity has been prescribed for the MSOs. However, the MSOs are mandated to carry the channels of broadcasters on non-discriminatory basis under the ?must carry? provision.

* The service providers of the addressable systems are allowed to price and package their offering of channels, however, they are required to comply with the modified twin conditions, as proposed in the draft amendment to the tariff order. These twin conditions are (a) the a-la-carte rate of a pay channel forming part of a bouquet shall not exceed two times the a-la carte rate of the channel offered by the broadcaster at wholesale rates for addressable systems (b) the a-la-carte rate of a pay channel forming part of a bouquet shall not exceed three times the ascribed value of the pay channel in the bouquet. The TRAI says it is doing this to ensure that the a-la-carte rates offered to the subscribers are reasonable vis-? -vis the bouquet/package rates.

*As in the case of pay channels, operators can specify a minimum subscription period, not exceeding three months, for Free-to-Air (FTA) channels subscribed on a-la-carte basis by the subscribers.

*Subscribers are free to choose channels on a-la-carte basis or bouquet/package basis or any combination of a-la-carte and bouquet/package.

*Channels, such as HD orMUMBAI: According to The NPD Group, a global information company, growth in watching television programming is driving subscription video-on-demand (SVOD) viewership, and Netflix continues to clearly dominate the category.

According to NPD?s VideoWatch VOD report, in the first quarter of the year the number of viewers watching television shows using SVOD services increased by 34 per cent, compared to the same quarter year-ago. NPD?s VideoWatch Digital tracking shows Netflix dominating the sector, with a 90 per cent share of video-streaming units during the first quarter, which was four percentage points lower than last year.

In the TV category alone, which accounts for 80 per cent of streams, Netflix holds an 89 per cent share. HuluPlus showed healthy growth in 2013, with 10 per cent of TV streams in Q1, while Amazon Prime accounts for just two per cent of the overall TV units streamed.

NPD senior VP of industry analysis Russ Crupnick said, "There?s no doubt that Netflix is driving the growth in SVOD, particularly with increased attention to television programming. We are also seeing good gains in the streaming numbers from Hulu Plus and Amazon Prime, and while neither pose an immediate threat to Netflix it is interesting to see which services later adopters will try."

In the first quarter of 2012, 76 per cent of SVOD subscribers streamed only from Netflix. This year that figure fell to 67 per cent, while 10 per cent of SVOD streamers used both Netflix and Amazon Prime, and eight per cent used both Netflix and Hulu.

Crupnick said, "Since its launch, Netflix Watch Instantly has enjoyed a virtual monopoly on the SVOD market, and the company still has a quite comfortable market-share lead. While Hulu Plus and Amazon both still have a long way to go before they come close to catching Netflix, we are beginning to see increasing trial of these services, even among some Netflix users." 3D, requiring special type of set top boxes are to be offered on a-la-carte basis and if such channels are also offered as a part of a bouquet(s), corresponding to each such bouquet, the operator would be required to offer bouquet(s) excluding the HD and 3D channels, at a reduced price, commensurate to the rates of these HD and 3D channels.

Written comments on these draft amendments have been invited from the stakeholders by 18 June.

You can download the two new proposed amendment drafts by clicking on the following links:

Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) (Second Amendment) Regulations, 2013

Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff (Second Amendment) Order 2013

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