NAB: Orange squeezing profits out of IPTV

LAS VEGAS – Orange, the largest global IPTV operator with 2 million customers, is making $1.9 billion in revenues from bundling multi-play offers and selling premium content and advertising and expects to double that number by 2011, primarily by pushing products onto multiple platforms, bundling services and creating its own content, Orange Vice President Jean Marc Harion told a NAB show audience Monday.

Twenty percent of Orange’s DSL subscribers in Europe buy its Orange IPTV service, Harion said, but almost half of its 26.7 million Orange mobile users opt for Orange mobile TV. As importantly, he said, when Orange created a soccer TV program for its mobile TV offering to enable customers to keep track of soccer games from their mobile handsets, Orange benefited from an immediate boost in 3G handsets, as more customers migrated to the service that could deliver soccer.

The key ingredients to the Orange success story are bundling multi-play offers, selling premium content and advertising, Harion said. His advice to other IPTV providers is to “control your roadmap and ecosystems – doing that made us agile enough to address the multi-screen side of the business,” Harion said. “Be pragmatic but be flexible as well.”

Acquiring attractive content was such a strong driver for Orange that the telecom operator formed its own production company and is now creating its own channels, including the Orange Cinema Series, a set of five channels sold for an additional 12 euros ($16) a month that are available on TV, PC and mobile screens and allow one-month “catch-up” access to all content as well as start-over service and video-on-demand.

“From the beginning, we focused on mobile TV, including customizing devices to foster mobile multimedia, including on the iPhone, which we now sell,” Harion said. “We also developed a new mobile ad-funded service including games, text messaging, location-based services and video.”

Orange overcame the initial chicken-and-egg issue of how to generate revenues to fund broadband buildouts by “pushing in all directions at the same time,” developing a multi-play bundle that is standard at about $50 a month, Harion said.

“The price is very low,” said Harion, who lives in New York City and noted he pays Time Warner $135 a month for his triple-play service. “But the competition is very high. In most places in Europe, you can find 10 or 12 service bundles. So we have no other choice.”

In order to market nationwide, Orange had to address the limitations of its ADSL 2+ network, and it has done this using hybrid set-top boxes that can incorporate terrestrial digital video broadcast (DVB-T) or DVB-S via satellite. Not all customers can get all programming, but they are able to get most of what Orange offers, Harion said.

“We had to demonstrate to the content providers that we could not only create a new business model but we could provide secure access to their content,” Harion said. “We also learned it’s important to keep control and flexibility to upsell premium content and cross-sell multi-play bundles. “

The importance of acquiring attractive and differentiating TV content and protecting that content against an increasing risk of fraud were two other key lessons, Harion said. “We underestimated the impact of security, which is critical being a new provider,” he said.

Orange is now using the TV as the driver of a full range of services in the home and the residential gateway, called Livebox, as the core of the home network, providing WiFi within the home.

“We have a large and very ambitious plan to develop new services,” Harion said, including home security and management of in-home media.