Tivibu continues its growth trend.

Turk Telekom Group announced 2016 year end financial results. You can see them at this link. Regarding the interest of this blog, let’s have a look to the Tivibu figures.

According to the regulatory body’s official figures, as of Q3 of 2016, Tivibu has a total of 589K subscribers. (428K IPTV customers and 161K DTH customers. )

TT announced a total of 677 subscribers at the end of Q4 2016. We don’t have yet the split of this number but most probably the majority of the net additions comes from satellite domain.

Tivibu customer base was kind of stucked before the launch of satelllite service at the Q3 of 2015. Since then Tivibu gained a momentum and has reached more than 2 million subs including the OTT customers. DTH service allowed TT to provide the DTH service to any household with a satellite dish. Satellite is the most common delivery method of Digital TV services in Turkey.

Fair Usage Policy will be discontinued starting 1th of May

In Turkey, the broadband fair usage policy was one of the most critical barriers that was kind of slowing down the penetration of OTT services.

If one’s broadband consumption per month is above a certain limit (typically 50 GBytes) then the fair usage policy is becoming active and the bandwidth is limited by 3 Mbps no matter to what broadband package you are subscribed to. (Please see below picture) The notification of TT seen below could be translated as: “As you exceeded the monthly fair usage threshold your broadband speed is updated as 3 Mbps on the remaining days of the month. Starting from the beginning of next month your broadband speed will be set based on your subscription package.”

Due to this limitation, it was quite challenging to secure the QoE on OTT service. Also, reaching to the fair usage threshold is just a matter of days if you watch Live TV channels through internet. This has discouraged service provider in Turkey to offer OTT box type of solutions like Now TV in UK.

Fortunately, the fair usage policy is changing this year. According to the BTK’s new regulation starting from 1st of May 2017, the broadband speed after fair usage quota will be adjusted based on one’s original speed. Also, consumption from 2 AM to 8 AM will be out of scope for fair usage quota limitation. Regarding the table below, if one’s broadband bandwidth subscription is from 16 Mbps to 24 Mbps the speed will be set to 8 Mbps instead of 3 Mbps after the fair usage threshold.

I think this is really a key step forward for OTT services. The consumers of OTT services shouldn’t be worrying if they are off-limits as the limited speed is quite still sufficient for typical use cases.

BREAKING: New tender for Turkish Football rights is on 25th of November

Link in Turkish

Yesterday, the president of Turkish Football Federation(TFF) announced that the new tender for the content rights of Turkish Football League will be issued on 25 November 2016.  

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The RFQ specifications will be announced around the end of this month. As of today, 5 local and 1 European company has completed their application to participate to the tender. The local ones are probablyTurkcell, Digiturk, D-Smart, Turk Telekom and Vodafone. The validity for the new tender will be probably 4+1 years starting from 2017-2018 football season.

The federation is expecting the tender to be finalized around 600 million USD per year. The legacy content owner Digiturk has acquired the rights at the expense of 321 million USD per year (424 million USD including taxes, federation fee and organization fee) in 2010. Demiroren stated that they decided to decrease TFF’s fee from 12 percent to 4 percent. It’s unclear that the declared expected quotation of 600 million USD is including all the costs.

It’s been emphasized that TFF is cooperating with consultants who actively worked on Premier Leauge’s tender. Obviously, TFF will target to maximize the revenue. Hence, it will be no surprise if they design the tender similiar to Premier League case.

e-interview with my friend from IHS Markit

My friend Constantinos from IHS Markit made an e-interview with me. I’m now sharing the script of this interview with my readers herebelow:

What is the current state of the OTT Market in Turkey? Is it a very niche market, with no real impact on the subscribers of the Pay TV players (like Digiturk, D-Smart, Turk Telekom, Turksat)? It has a very small percentage of subscribers, let ‘say less than 1% of the Pay TV Market?

If the OTT landscape in Turkey is examined deeply it’s seen that it is mainly dominated by OTT extensions of the legacy Pay-TV operators. In other words, the majority of the OTT consumption is done by the services provided by Pay TV players, hence almost no impact on the major players. Digiturk, Turksat, TT and Turkcell are all offering their OTT services as a bonus to the main TV offering. D-Smart’s BluTV is kind of different in the sense that with the new organisation and ambition Dogan Group is trying to position BluTV as a isolated product apart from D-Smart but they are still struggling. On top of this, there are still a number of independent OTT players like Netflix, Filmbox etc but due to the lack of marketing power and brand awareness they are not that competent and hardly gain new customers. Overall, taking into account the total number of OTT users in Turkey they could arrive up to 2,6 million mainly powered by TT and Turkcell TV+ customers while the global pay-TV market in Turkey is close to 6 million.

Here are the up-to-date figures:

Tivibu GO: 1,927 million as of Q1, 2016. Reference is the link below

http://www.ttinvestorrelations.com/financial-operational-information/fact-sheet.aspx

Turkcell TV+: 679K as of April, 2016. Reference page 16 at the presentation below.

http://s1.turkcell.com.tr/hakkimizda/en/yatirimciiliskileri/InvestorPresentationLibrary/Turkcell-Investor-Presentation-June-2016.pdf

If you add just the OTT subs of Tivibu GO and Turkcell TV+, it makes almost 2,6 million. The next question is how active are these people, what is average amount of time they spend on OTT services etc. 

· Both Turk Telekom (Tivibu Web) and D-Smart (BluTV) have launched standalone OTT services (I mean OTT services offered outside of their Pay TV subscribers’ base, offered to anyone interested without having to be a subscriber). Do you see Digiturk launching something similar in the near term, before the end of 2016?

Actually Digiturk already has such a OTT only service called Digiturk Play to which anybody without any Set-top-box could login to. 

There are mainly 3 packages:

– free package

– cinema package: 4,99 TL (9,99 TL if you’d like to watch also on Smart TV)

– premium package: 12,99 TLm (19,99 TL if you’d like to watch also on Smart TV)

· Is Netflix a threat or an opportunity to grow the Turkish online video market? It can be an opportunity by educating the Turkish people to conduct transactions online, to pay online for watching TV content on any device and in general to spread the use of devices used to watch TV content (tablets, smart-phones, game consoles, connected TVs). What do you think?

Frankly, Netflix was a quite sexy brand in Turkey before the kickoff of global expansion in January 2016. A lot of people in the industry was referring to Netflix as a extremely successful case study. Nevertheless, in the past 6 months since the launch of the service in Turkey, Netflix simply disappointed Turkish consumers. It’s basically because of the limited content portfolio as opposed to the content depth in US , lack of localisation (dubbing,subtitle) and quite high pricing level for Turkish consumers. It’s also worth to mention that piracy is significantly common in Turkey. But still Netflix is definitely an opportunity in Turkey since from content strategy point of view, from technology point of view, from content marketing point of view as well as user experience point of view there are a lot of things to learn from Netflix for the Pay-TV players in Turkey. Definitely, it will fuel the overall market development in many aspects over the coming months and years. Today, we are all witnessing that the number of localised Netflix content is constantly increasing. As the number of people using Netflix increases, this will also support the maturity of the end-to-end OTT value chain in general.

· Which is the OTT strategy for big broadcasting groups like Dogan, Dogus, Kalyon Group and Ciner? How is Dogus plan to further benefit from tvyo?

I do not have in depth information about this. But what I see in general is big broadcasters are mostly trying to leverage YouTube to make their VOD catch-up content widely available and monetising by ad revenue. Tvyo is kind of silent since some time with no major improvement on the service.

· What about the regulation of OTT services? Is in place relevant regulation in Turkey? If not, do you think that regulating these services will be beneficial for their growth or not? I am asking because in Turkey there have been attempts to regulate Facebook and Twitter recently.

Yes, I hear that RTUK is actively working on regulation of OTT market but i see it quite challenging to regulate the OTT space. The ultimate target is probably license OTT providers in some ways but considering low revenue low margin characteristic’s of OTT market, it think it will not help to market growth.

· Finally, how do you see the OTT Market developing in Turkey in the next 2,5 years, till the end of 2018? Do you see it growing fast, much faster than some developed European markets? Or with a much smaller pace, like the Middle East? And which factors will drive the growth and acceptance by the public of OTT services.

I think it will grow fast over the coming years. The rationale behind this is the upcoming tender about football broadcasting rights around the end of the year. Based on the statements of Turkcell one can expect Turkcell will become quite aggressive in the tender and leverage on its superior 4.5 Spectrum capacity in order to deliver football content to mass market. Also, the increasing broadband speed and coverage coupled with the expected increase on the fair usage cap will fuel the growth of OTT market.

 

 

 

My two cents about Turkish TV Market

You may already know my dear friend Özgur Coşar. He is the owner of the website http://tvtechtr.blogspot.com.tr where he writes on a variety of topics on Turkish TV&Radio market. I strongly recommend you to have an eye on his website. Past week he’d asked me to make an e-interview and came up with a number of questions. Following that I wrote down my personal view in return and Ozgur then published it in his blog.  Herebelow you can find the copy of the interview:

It is my pleasure to introduce you Mr. Uygar BOYNUDELİK. He is a friend of mine who is working in the media business in Turkey.
 

1. Dear Mr. Boynudelik, let me start with a classical question. Can you please introduce yourself for my readers. 

Dear Özgür, let me first start by thanking you for regularly writing blog posts and being so sincere and transparent and open-hearted as opposed to the general positioning in the industry. Frankly, I’m a fan of yours, truly 🙂 Anyway, I can simply call myself an engineer who is quite interested in TV technologies. I’m really enjoying reading, writing, researching about it. This is what I do for a living (I’m in charge of STB product management in Turkcell) and also my beloved hobby. I keep writing on www.uygarboynudelik.com in Turkish and on www.turkishtvmarket.info in English since many years. I encourage your readers to have a look my web sites, at the end we’re living in a small industry 🙂

2. When we look at the pay TV business in Europe we see that majority of the population is subscribed to one of the offers. However, in Turkey, payTV has just 35 % market share. According to you what is the main difference between the markets?


Let’s me first start with a quick summary of the Pay-TV market in Turkey. Based on the latest report by BTK (regulatory body in Turkey) the Pay-TV subscribers are categorized as follows:
DTH:
  • Digiturk: 2,79 mio
  • D-Smart:  931K
  • Filbox: 29K
  • Tivibu uydu: 116K
Cable:
  • Turksat Cable: 1,16 mio
IPTV:
  • TTNet: 350K
  • Turkcell TV+: 268K
In total, the number of Pay-TV subs are 5,6 million. Actually there are households with more than 1 subscription. Anyway for the sake of simplicity let’s consider there are around 20 million households, then market penetration is calculated as 28 percent. This is simply the ratio of households with Pay-TV subscription. There are certainly homes with OTT services only such as Netflix, Apple TV etc. Nevertheless, from my perspective the Pay-TV rollout should be calculated with this methodology. After this relatively long introduction, coming back to your question my short answer will be the main difference about the market maturity is simply the average income level of the population. If you compare income per capita in Western Europe to Turkey you’ll notice that income per capita is roughly four times bigger in Europe. I see the gap between average income level as the main reason. Secondly, the high level of piracy is another reason, it’s quite difficult to sell content in Turkey while there are tons of free-of-charge, good quality content on the internet. Thirdly, the negative experience people had with various operators are another barrier for the Pay-TV market to grow. People had suffered a lot due to long-lasting and tiring cancellation processes, miscalculated or miscommunicated surprising bills, not best-in-class customer care cycles etc. All these stuff somehow caused people to try to stay away from 24-hours commitment type of Pay-TV offers.

3. Cable, satellite & terrestrial are used nearly 30 % each for TV reception in Europe. As you well know, in Turkey, TV reception is mainly depended on satellite. What are the results of this situation?

That is a very good point Özgur. I think Turkey is kind of unique with this split. If you don’t mind I’d like to share first my two cents about the root-cause of this uniqueness, later on I’ll come back to the consequences. Historically terrestrial broadcasting has been a real mass in Turkey. The government failed to regulate the licenses and broadcasters with the political power or financial strength managed to build their own towers and broadcast their live TV channels. Considering cable space, this medium has been and still is under control of Turksat -a state-owned company- for many years and they’ve lacked to make the right level of investment to expand their footprint. Even today, cable service is only available on limited areas. On the other hand, satellite installation has been increasing constant since 15-20 years in Turkey. As the satellite dish installation coupled with ‘in China made’ cheap satellite receivers become more and more widely penetrated broadcasters started to invest to have free-to-air channels on Turksat satellite even with poor video quality. The main business model for the broadcasters was to have a free-to-air channel on air, to have the possibility to reach millions of people and try to get any possible level of rating and get the interest from advertisers. Alternatively there are a variety of tele-sales channels that are selling remarkably interesting stuff (things to increase sexual power, things supposedly heal your diseases etc.) and dating platforms. Also from time to time, we hear about lawsuits of the people who one way or another fooled by some of these channels. Today, there are almost 500 FTA channels in Turksat. I think this is not typical. Some of these channels are local, some of them are poor video quality. Coming back to the consequences, this disproportionate balance between the alternative mediums (terrestrial, satellite, cable, IP) resulted in almost to chance for Digital Terrestrial adaptation in the market which is already too much delayed. The content quality of the Live TV channels is significantly biased towards rating. The producers are focused on not producing content with high quality but content that could be appealing for the majority of the people thus bringing better ad revenue. The majority of the programs during daytime is either about matching man and woman willing to marry or Big brother type of programs with a lot of aggression. I think digital terrestrial television is dead at birth.

Many thanks for your answers & time. 

 

Turkcell TV+ continues its fast growth

A few weeks ago Turkcell announced the results for the year 2015. You can have a look to the presentation here.

It is possible to get key figures about Turkcell’s popular TV service Turkcell TV at pages 11 and 12 of the presentation.

Briefly, the service has reached to a total of 588K subs within almost 1,5 years.

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Out of this 600K base, the number of IPTV homes are 224K. This has been achieved in 1,5 years which indicates around 40K net addition per quarter. If you look to the trend and check how quickly the number of subs is increasing it’s really impressive.

Having a look to the customer gain in TV market in the past year, Digiturk, D-Smart and Teledunya are all steady with not much changing number of customers. On the other hand, installed base of Tivibu and Turkcell TV+ are on the rise.

Actually, the rise on Tivibu side is due to the new satellite platform. IPTV domain of Tivibu is kind of stucked lately.

Turkcell Superonline has 900K fiber internet customers. Currrently, the ratio of households receiving triple-services is around 25 percent. It’s quite obvious that Turkcell’s main focus will be to increase this ratio over the coming years and eventually to provide tripleplays services to the complete base. Apperantly future is bright for Turkcell. Let’s keep monitoring the progress and how sustainable is this ramp-up.

Tivibu figures as of end of 2015.

Turk Telekom had announced 2015 results on the investor relations section of the website. The presentation could be downloaded here.

The most significant pages related to TV are  as follows. Here is my two cents about this slides.

  • Pay-TV penetration in Turkey is around 27%. This is far behind the Europe’s penetration rate of 61%. I think even though there is obviosly planty of space to grow, it is not happening that fast. Digiturk’s and D-Smart’s base is quite steady over the past few years as well as Cable. There is only growth on IPTV space.
  • TT is aiming to leverage on Champions League and UEFA Europe League but it’s not happening that fast.
  • It’s been more than 5 years since Tivibu has been launched. At the end of 2014 number of subs was less than 300K. Just in the second half of 2015, Tivibu gained 93K new customers in the second half of 2015, around one third of the installed base. This is really noticable, The main driving force was clearly the exclusive sports content.
  • Considering the spectecular gwowth of Turkcell TV+, an interesting question is then when Turkcell TV+ will catch Tivibu?

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D-Smart OTT service D-Smart Blu rebranded as BluTV

D-Smart’s Blu service is rebranded as BluTV powered by a new logo and new website design.

Now, the service costs 6.9 TRY / month. There are a total of 30 Live TV channels around half of which are basically premium channels such as NBA TV, Nat Geo, Eurosport, BBC.

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In addition to Live TV channels, there is also a wide variety of VOD titles from several genres.

As a matter of fact, this simply seems yet another OTT service. So far, in Turkey OTT TV business model is yet not correctly formulized. Around 2 years ago, I’ve posted an article about the OTT players in Turkey. (link) I think none of them could achieve to build a profitable business model since then.

The real challenge for an OTT TV service is first to overcome the barrier of collecting money. if this service is an extension of an Service Provider’s existing bill, things are much more straightforward. For instance, if any OTT service is provided by an ISP or mobile operator, chances are the user will be OK to get charged an extra by the monthly bill she/he is already paying.

Nevertheless, if the service is an all-access type of service such as Netflix then the OTT player have to build an payment channel with the subscriber. To that end, the provider shall either ask the credit card info of the user or ask for mobile payment. In any case, it’s quite discouraging to fill out all the payment data. That’s why I had difficulties to feel optimistic about the OTT TV services in Turkey. I think either Tier-1 operators OTT TV service or world-leader like Netflix could compete in this industry.