France’s over-the-top (OTT) market is generally considered to be one of the most advanced in Europe, with most research placing it as either second or third in Europe in terms of revenues and penetration. But the French market is unique as French telcos have cooperated to create standards around IPTV (Internet Protocol television) and invested aggressively in rolling out the services.
Philippe Boscher, head of digital, data, research, addressable TV and innovation at TF1 Publicité, said that that investment has lead to France’s unusually high IPTV penetration, which is around the 60 percent mark.
IPTV is technically different from OTT by most definitions. OTT allows TV content be delivered without the need for a pay-TV subscription, going ‘over-the-top’ of the set-top box. IPTV meanwhile is a managed service, delivered by a telco via a set-top box.
But the two perform similar functions. For example, you can watch on-demand content on a TV set in the same way you would on an OTT device. Boscher said that IPTV’s prevalence in France introduced audiences to video on-demand, whilst enabling them to rewind and record live TV.
Grivet added that IPTV has helped propel the growth of advanced TV advertising. “Because of the high penetration of IPTV, you will see generally high usage of replay and catch-up services. And the IPTV set-top box is an environment where it’s easy to run addressable advertising.” Boscher agreed that IPTV has enabled the use of data in advertising, as well as better measurement and new KPIs.
Throttling the OTT market
But while there have been benefits to the growth and penetration of IPTV, its dominance has resulted in less money being invested in the next generation of services. “Broadcasters put a lot of focus on IPTV,” said TF1’s Boscher, “and then a few years later realised there perhaps should have been more focus on developing mobile apps, for example, than we originally thought”.
Bichoï Bastha, chief ad tech officer at Dailymotion, agreed. “I think that other OTT platforms have been held back a bit by IPTV, partly due to the high usage of IPTV,” he said. “Roku isn’t big in France, Apple TV usage in France is very low. And apps for smart TVs aren’t as common in France as they are in the US. So I think it’s holding back the evolution of the market.”
This wasn’t necessarily a problem at first, as broadcasters were generally happy to be able to offer advanced services to their audiences via IPTV. But nowadays, it’s fair to say that IPTV’s offering tends to be less compelling than those offered by the likes of Roku, Amazon Fire TV, and Android TV.
“IPTV was very positive at the beginning, but now could be considered more questionable,” said Boscher. “Does it deliver exactly the same quality, and the same level of control for TV broadcasters as other forms of OTT?” He added that developing services for IPTV, which have to be tailored for multiple generations of set-top boxes made by the big four broadcasters, is “a bit of a nightmare”. He compared it to developing a mobile app, where you only really have to deal with Apple and Android. For IPTV, you might need to tailor the service for up to fourteen different devices.
And the user experience can be poor on older set-top boxes, which can reflect badly on the broadcaster even when it’s not their fault. “It’s like if you try to play a new game on a very old iPhone, you won’t have a good experience,” said Boscher. “But you might think the game is no good, even though it’s your phone that is the real problem.”
Advanced advertising on IPTV is also missing a lot of the functionality advertisers often want. “The limitations of the technology are difficult to work with,” said Dailymotion’s Bastha. “It’s pure VAST, the creative can’t be very high quality video, there’s no cookie targeting, there’s no frequency capping… all of those things make it really limited.”
Will the broadcasters break away from the telcos?
Of course, broadcasters aren’t shackled to IPTV forever, and some are starting to distribute OTT apps across non-IPTV platforms. “Some of the broadcasters have learnt that in order to sell in a sophisticated way and leverage data and programmatic trading, you need to have your own environment,” said Bastha. “You see that with Canal Plus – they have their own OTT app which is distributed on a lot of channels like the App Store and the Android Store, and it’s available as well on Apple TV and other devices. They know in order to be sophisticated in their ad sales they need to get rid of restrictions that IPTV has in place.”
But untangling themselves from the telcos can be tricky for broadcasters, demonstrated by negotiations over the past few years over TV transmission fees.
Historically, French telcos have not paid broadcasters to be able to distribute their free channels, but broadcasters started pushing for transmission fees over the past few years in recognition of the added value of the IPTV services that are bundled with pay TV packages. After tense negotiations the telcos agreed to the fees, but in return broadcasters pledged not to develop apps for connected TV platforms, since these would compete with their IPTV services.
TF1’s Boscher said these deals are working well for broadcasters at the moment, but others are more sceptical. The HbbTV Association’s Grivet said the broadcasters likely didn’t get as much money as they would have wanted from the telcos.
The deals have tied broadcasters to the telcos for now, but they may look to free themselves in the future. “These deals of course might evolve,” said Boscher. “The telcos might pay more to have more content, more services, previews, ad free services etc. Or they might be more reluctant, in which case we’ll of course develop our direct access to consumers, which may lead us to have a connected TV app some day.”
Salto, a joint subscription video on-demand (SVOD) service being developed by France Télévisions, TF1 and M6 could also shake the market up. The service will cut out the telcos, since it won’t be available on IPTV. It won’t break the current agreement between the broadcasters and telcos since as it’s a paid service (unlike IPTV which is free and ad-funded), so it doesn’t compete with their IPTV offerings.
But Grivet speculated that the broadcasters in the future might introduce some level of free service into Salto, as a first step towards breaking away from IPTV.
“My guess is that the ultimate strategic goal of the broadcasters is move on from distribution through the telcos because it’s not a great deal for them,” he said. “It’s not bringing in a lot of money. It means data and targeted advertising opportunities remain in the hands of the telcos. And it constrains the broadcasters from having innovative products, because they’re always dependent on the technology and the goodwill of the telcos.”