The Triple Play model of telcos, integrating television in the fixed offer, must adapt to the explosion of streaming uses and a set-top box that is no longer popular
Telecom operators and their traditional Triple Play offers continue to dominate TV access in French households. At the end of 2021, the IPTV reception mode reached 60% on the main TV set, in constant progression since the 2000s, according to an Arcom publication of June 2022. This increase should continue over the next few years, especially with the roll-out of the fibre network in the least dense areas, an opportunity to convert new eligible households to IPTV offers.
This development is taking place at the expense of satellite and DTT, declining technologies, which, in 10 years, have respectively lost 10% and 21% of the reception modes on the main TV set of equipped households. Despite a usage that remains substantial, the future of DTT is often questioned and Canal+, by facilitating in 2020 its contractual conditions of exit from DTT, does not hesitate to clearly show its intentions not to stay for long, on pay DTT at least.
ISPs seem therefore to have nothing to worry about, retaining the primacy of our gateway to TV content. However, the transformation of the audiovisual market and our consumption habits, both in terms of content and equipment, are shaking up the domination of our beloved set-top box.
In the content war, SVOD platforms (Netflix, Disney+...), have rapidly imposed themselves in the audiovisual landscape, displaying ever increasing volumes of users. In July 2022, Netflix, for example, claimed to have 10 million subscriber households in France, compared to 7 million in 2020. These new services, by multiplying investments in original productions, TV rights acquisitions and sports rights (Prime Video's acquisition of the TV rights to the French Open and the Soccer League 1), are drying up the content of traditional publishers such as TF1, France Télévisions and M6. As a direct consequence of this competitive intensity of the platforms, the viewing time of the historical channels - the vast majority in a linear format - is returning to its pre-covid crisis level (3 hours 41 minutes of daily TV viewing in 2021 vs. 3 hours 40 minutes in 2019) and its downward trend among the younger generations (-20% in 2021 vs. 2019 for the 4-14 year old).
These evolutions are a threat for ISPs because these platforms impose a native OTT model (Over The Top, outside the ISP's TV offer), by making themselves available on all our screens. The set-top box then becomes just one of many ways to access Netflix and other platforms.
Hardware players are benefiting from this acceleration of streaming: the share of users of OTT equipment, and in particular Dongles carried by US tech giants (Google Chromecast, Amazon Fire TV, Apple TV, etc.), is increasing rapidly and constitutes an alternative to the operators' set-top box.
But the most serious threat to ISPs comes from TV manufacturers, and the democratization of Smart TV, which is expected to reach 45% of connected TV households by 2021 (all households with connected TV, including indirectly via a set-top box, console or third-party box), +5 points vs. 2020. Why should I use my operator's remote control when my TV's remote control allows me to access the latest TV series via a dedicated button?
Samsung, the leading TV manufacturer in France, also continues to invest in the digital experience of its smart TV platform, which is becoming increasingly competitive, with a growing number of compatible entertainment applications. As an example, in video games, the Samsung Gaming Hub, a dedicated gaming homepage available on 2022 range Smart TVs, has recently integrated Google Stadia and Xbox applications.
TV usage is changing rapidly, and operators have understood this. To preserve its model, Bouygues, for example, is moving towards digital TV by offering since 2021 a fixed offer without a set-top box, with a Smart TV application, and by subsidizing Samsung televisions.
The historical pay-TV packages are gradually being replaced by SVOD services and are sometimes natively integrated into fixed offers; ISPs are thus aiming to intermediate the distribution and use of this new content, which is slipping through their hands.
While set-top boxes should remain the norm in the majority of French households in the short term, the ability of operators to maintain an attractive television offering in the long term, particularly among young people, who are more inclined to consume delinear and OTT content, is more uncertain.
Article by Alexandre Hennequin, Manager specialized in Telecoms, Media and Entertainment at PMP Strategy, published in the Journal du Net, November 17, 2022