Agreement on the business model between the involved parties in the value chain will be a key decision to be made. This choice cannot be considered separately from the decision on the licensing model.
Target groups Viewers S1 Viewers S2 Viewers S3 Viewers S4 no Stages ↓ 1 Awareness 2 Understanding 3 Attitudes 4 Intentions 5 Conversion 6 Satisfaction Public N1 Public N2 STB supplier Broad- caster Message 1 Message 3 Message 3 Message 2 Message 2 Message 4 Message 4 M. 2 M. 2 M. 4 M. 5 M. 5 M. 5 M. 5 Message 4 Message 4 M. 5 M. 5 M. 5
In the case model A is decided, the broadcasters will be free to adopt any business model. For the DTTB services this is basically the choice between pay-tv services or FTA services (or any combination). Although the NRT is not involved in selecting a business model for the DTTB service, the NRT should consider setting standards for the CAS (see section 4.1 in this report).
In case model B is selected, the NRT will have to decide a business model for the common multiplex operator. This operator can offer:
1. Distribution (or network) services only: the broadcasters (or any other service provider) will have
to pay a distribution fee for the service of broadcasting their program(s) in specified areas (against a set of agreed service levels, including picture quality, network availability, etc.). The impact on the broadcasters will be relatively limited as the broadcaster can still broadcast FTA. Alternatively the broadcasters can encrypt their content and deliver this encrypted content to the
multiplex/network operator for distribution17. In this way the broadcasters can also offer pay-tv
services;
2. Distribution and television services: here the multiplex/network operator offers next to
distribution services also its own television services (i.e. its own television content and mostly likely as a pay-tv service) directly to the viewers in Cambodia (see also section 4.4.2 in this report). In this model the multiplex/network operator is also service provider/broadcaster. In the case these pay-tv services are reserved for the multiplex/network operator (for example for having a single pay-tv bouquet and not to fragment the market too much), the existing
broadcasters cannot offer pay-tv services18.
The Guidelines provides some guidance for broadcasters in selecting a business model for DTTB services. As said above, considering the DTTB business model the key question is really whether to launch a multi- channel offering on the basis of a free-to-air (i.e. a business model on the basis of advertising income) or a pay-tv model (i.e. a business model on the basis of subscriptions).
As the Guidelines indicate whether a FTA or a pay-tv offering can be success depends on various factors, including:
1. For FTA models:
a. Additional viewers or viewing hours. Any FTA proposition will have to add additional viewers
(or viewing hours) not previously addressed by existing platforms. In most cases, in the FTA model the network transmission costs of the DTTB network have to be financed by the additional advertising income on the DTTB platform. As discussed in section 4.3, this may not be the case in model A. Adding viewers or viewing hours is not necessarily restricted to non- served viewers (e.g. because the channels are not broadcast on widely distributed on analogue networks), but can also be driven by additional (viewing) value for the end consumers. In France for example, new viewers were attracted by offering a multi-channel HDTV offering. As discussed in section 4.2.1, in Cambodia improved picture quality (although not likely to be HDTV) can add additional viewing.
b. Absolute volume of the advertising market and market share for television advertising. Some
markets may have limited advertising budgets, which may not cover the additional cost of setting up and running a DTTB services. Please note that also the advertising budget distribution should be considered. In some markets the advertising spend might be proportionally larger than for other media (e.g. such as radio or newspapers). As advertisers are known to be conservative, changing these spend patterns might be a lengthy process.
17
Special attention should be given to a secure way of delivering the encrypted content to the head-end of the multiplex operator.
18
2. For pay-tv models:
a. Other existing pay-tv offerings in the market and their bouquet composition. Existing pay-tv
service providers might address only the top segment of the market with relatively expensive packages. There might be room in the market for offering lower-tier packages without exclusive/expensive content. This situation seems not to exist in Cambodia as analogue cable, with over 1.2 million subscribers, already serve a considerable part of the market with a cheap offering. In addition, existing service providers might provide a (perceived) bad service, providing a driver for viewers to switch to an alternative television offering (not observed during the first visit).
b. Existing free-to-air offerings. The potential market share for pay-tv service might be limited
by the existence of widely adopted free-to-air offerings with Cambodian relevant content (the only offering in Cambodia is the analogue terrestrial services).
c. Existing television content contracts in the market. Especially exclusive content deals might
limit the possibility of creating attractive pay-tv packages. For example exclusive live football broadcast rights. Conversely, the absence of such exclusive contracts might create an opportunity (no information available).
d. Willingness to payfor television content. The willingness to pay is very often historically and
culturally determined. Pay-tv service providers should carefully investigate paying patterns for television services. As said in section 3.4.2, this is an aspect that still needs to be researched for the Cambodia market.