The price of exclusive content

Adeel Najam, Frost & Sullivan
14 Oct 2010

Exclusive content carriage has been a formidable pay-TV strategy but ultimately works against providers and consumers

Many alternative pay-TV providers around the globe including PCCW (Hong Kong), France Telecom (France) and SingTel (Singapore) are achieving success largely due to exclusive content acquisition. Incumbent pay-TV providers also use exclusive content to keep their market dominance from waning, and block the prospects of success for new entrants.

Content exclusivity is currently a contentious issue around the world and an on-going regulatory concern in many markets. Regulators and competitive bodies fear exclusive content carriage can give a provider significant unfair advantage over competitors. They fear that dominance of one provider can harm the competitiveness of the pay-TV market, damage its future growth and cause consumer dissatisfaction.

Pay-TV providers that are enjoying content exclusivity deals obviously view exclusive content carriage positively while providers without premium content are against it. In Hong Kong, for example, PCCW favors exclusivity deals while HKBN is strongly against them. PCCW has overtaken incumbent i-Cable, which was enjoying exclusive TV content before 2005, as the largest Hong Kong pay-TV provider due to exclusive content carriage. Generally, most providers do acknowledge that exclusive content deals increase content costs for them, but they are afraid that if they do not make a deal, a competitor will.

In a market with exclusive content carriage, the consumer is forced to choose its pay-TV provider based on who is carrying his or her desired content, rather than who has the best customer service, quality of service and pricing. Sometimes, it also happens that a consumer has chosen a provider based on its carriage of a particular content and in the next bid cycle, the provider loses the carriage rights for that content. The consumer is then stuck with a pay-TV subscription without the desired content.

In some markets with high content fragmentation among pay-TV providers, consumers are forced to subscribe to more than one pay-TV provider and maintain more than one set-top box. Expensive pay-TV provider content acquisition deals also drive up the subscription prices for consumers.

Content owners fiercely oppose any regulation or control on content carriage agreements, saying these should be allowed to promote a completely free market. They also argue that such deals benefit the consumer by helping the creation of quality and innovative content.


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