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EE Gets into Video

October 09, 2014

EE Gets into Video



By Gary Kim
Contributing Editor



U.K. mobile and fixed line operator EE is getting into the entertainment video business in a new way. And there is a twist. Its newest offer apparently includes 70 channels, all available at no incremental charge for EE customers buying mobile and fixed high speed access service from the company.


“So now you don’t have to pay for an expensive monthly TV service or settle for a TV box with basic features,” EE says.

EE TV is available to all EE, T-Mobile and Orange (News - Alert) mobile customers who also have EE broadband. “You can get EE TV free with EE broadband for just £9.95 a month plus £15.75 line rental,” EE says.

The EE TV service includes 1 TB hard drive for storage of Freeview DVB recordings and tuners to allow recording or viewing of four channels at once, the company says.

The service features the ability to record and store content from six channels in a 24 hour buffer on hard drive, watch on TV or stream locally to compatible tablets and phones.

Access to BBC iPlayer, wuaki.tv, The Box (News - Alert)+ and YouTube also is part of the service.

Separately, Milo Medin, head of Google Fiber, says video "is the single biggest impediment" to Google (News - Alert) Fiber's deployment.  "It is the single biggest piece of our cost structure," said Medin.

That illustrates an important principle in the consumer communications services business. As always, sustainable business models matter. And as it has turned out, with high speed access as the core and anchor service, video entertainment has emerged as a “lead app” for broadband.

For Google Fiber, video is the difference between account revenue of $70 a month and revenue of $120 a month, or about 70 percent more revenue per account.

In a competitive market, sale of multiple services really matters. In a monopoly environment, a service provider sells one service for $33 a month, for example, to nearly 100 percent of homes.

So in a 100-home neighborhood, that provider generates $3300 a month.

In a competitive environment, with three roughly matched and talented suppliers, no single firm might get more than 33 percent take rates. So each network can sell a $33 a month service to only a third of homes.

That means monthly revenue of about $1089 for each supplier. Adding one extra service at $33 a month boosts monthly revenue to $2178. Selling three services, each at $33 a month, results in monthly revenue of $3267, about the same revenue as would be generated by a single-service reaching nearly every home.

And that is why video matters. It is the most direct way to boost per-account revenue in a competitive market. 




Edited by Stefania Viscusi
 
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