Now, let’s delve into the matter of Free-to-Air vs. Pay-TV broadcasting. In the Czech Republic, digital terrestrial broadcasting is being associated with the free television viewing, while for example, in Slovakia, there exists a Pay-TV variant of digital terrestrial broadcasting in which television channels are encrypted. In the Czech Republic, a service of this nature was previously offered under the name Anténa+ by Skylink. What is your viewpoint regarding such a service? Does the case of Anténa+ suggest that this approach may not be suitable for the Czech Republic? Do you have any plans to introduce a comparable service in the future?
We conducted a technical evaluation of the potential for Pay-TV several years ago, specifically during the DVB-T standard broadcasting era. Our assessment confirmed our technical capability to deliver such services. However, subsequent discussions with our customers revealed a notable lack of interest in this form of broadcasting and related services within the Czech Republic. Consequently, we made the decision not to pursue this avenue. Given the evolution of streaming services, it would not be prudent for us to introduce such a service either now or in the future. We firmly believe that this particular business model is outdated and lacks relevance for the Czech Republic.
As it stands, the frequencies assigned to multiplexes in the Czech Republic are reserved until 2030. This calls for consideration regarding the prospects of digital terrestrial broadcasting. What is your viewpoint on this matter, and how do you envision the future of digital terrestrial broadcasting?
Very strong! Moreover, this issue is not confined to the Czech Republic but is relevant across Europe. Frequency discussions are often shaped by the distinct business interests of certain groups that seek to impose limitations on digital terrestrial broadcasting. Nonetheless, when examining the entirety of Europe, digital terrestrial broadcasting is utilised by 43% of the population, making it the most prevalent platform across the continent. In the specific context of the Czech Republic, approximately 54% of the population possesses television receivers for digital terrestrial broadcasting. Furthermore, there are nations where the adoption of digital terrestrial broadcasting is even more extensive, such as Italy and Spain, where it surpasses 80%. These are indeed substantial countries. Likewise, in countries like France, the penetration of digital terrestrial broadcasting stands at approximately 50%. For these reasons, we hold the belief that substantial changes should not be anticipated beyond the year 2030. This perspective aligns with the preliminary stance of the European Union for the World Radiocommunication Conference scheduled for the end of this year in Dubai. The European Union’s stance advocates the preservation of frequencies for digital terrestrial broadcasting even post-2030, with no expectation of significant disruptions.
The challenges facing digital terrestrial broadcasting are predominantly driven by business motivations. The rationale behind this is quite straightforward – presently, around 45% of the population does not pay for digital terrestrial broadcasting, and IPTV operators naturally aim to convert these individuals into paying customers. The primary impetus for this pressure lies in the fact that many IPTV operators also function as mobile operators. This intersection of business interests clarifies the driving force behind the pressure and its origin.
You’ve just raised an interesting point. While Europe is predominantly covered by Free-to-Air television broadcasting, it’s true that some households opt for Pay-TV services such as cable, satellite, or IPTV. In the Czech Republic, over 40% of households use IPTV or cable television. Could you please elaborate on your relationship with IPTV at ‘České Radiokomunikace’?
It’s important to make a clear distinction between IPTV and streaming services, as they fall into two distinct categories. From our perspective, streaming services hold a much more promising outlook compared to IPTV alone. For instance, if we examine the United States, there has been a notable decline in traditional Pay-TV services such as cable or satellite TV, as well as IPTV. In the Czech Republic, the adoption of IPTV in 40% of households is not solely due to the rapid growth of IPTV services. A technological migration is underway, with many customers transitioning from cable TV, particularly CATV, to IPTV. An illustration of this trend is Vodafone’s gradual shift from cable TV to IPTV. Indeed, this progression is a typical technological advancement and falls within the normal course of development. The growth of IPTV is not solely driven by customer demand but is also substantially influenced by technological factors.
Nevertheless, we place a higher level of confidence in the combination of streaming services and digital terrestrial broadcasting, as it provides the end customer with greater flexibility. With this approach, viewers are not compelled to purchase entire packages comprising fifty or eighty television channels and pay for all of them. Instead, they have the option to choose from companies offering streaming services, which essentially serve as content providers, and acquire the packages that align with their interests. This flexibility enables them to seamlessly transition between these platforms. For instance, they can subscribe to two such platforms one month and then opt to discontinue one in favour of another the following month. This approach is markedly more efficient and adaptable compared to traditional IPTV services.
We do not hold any reservations against streaming services. In fact, we offer streaming services and HbbTV to all our customers. In the realm of commercial TV channels, with the exception of one entity, all television channels receive streaming services and HbbTV services from us. We provide a comprehensive technological solution and ensure television broadcasting for channels such as Nova, Prima, Seznam, or Óčko.
We’ve noticed a growing interest among viewers in streaming services over our networks, and this trend shows no signs of abating. Our collaborative approach involves commercial TV channels such as Prima and Nova producing unique content. We then process this content on our infrastructure and manage its distribution using our cloud services and content delivery networks, ensuring it reaches end consumers, whether they’re using television receivers or mobile devices like tablets.
You mentioned both streaming services and HbbTV, which was introduced in 2014. As a quick reminder, HbbTV merges traditional television broadcasting with internet features, akin to the familiar red button. When a viewer presses it and has an internet-enabled TV, they can access supplementary services. How did HbbTV perform in its initial days in 2014, and what is its current usage like today?
HbbTV was initially introduced in the Czech Republic by Czech Television as the pioneering broadcaster. They commenced their testing phase around 2013, as far as my recollection serves. These initial stages primarily involved technical tests. In 2014, we initiated a partnership with TV Óčko, and I would like to express my gratitude to Lukáš Hnilička, who served as the technical director of Óčko at that time, for his outstanding collaboration. It’s rather serendipitous because I was personally responsible for managing this project at ‘České Radiokomunikace’, and I also have very positive recollections of it. Our partnership with Óčko facilitated the establishment of the initial HbbTV platform for commercial television, enabling us to offer services from the very beginning. If my memory serves me correctly, you could, for instance, use HbbTV to book a Liftago ride.
In 2014, we set out on a promising journey for HbbTV in the Czech Republic. During that period, HbbTV utilisation was constrained by the limited availability of televisions equipped with this technology. Even if someone owned such TVs, they were frequently not connected to the internet, rendering HbbTV inaccessible. Ironically, the transition to DVB-T2 proved advantageous for us as we struck an agreement with TV manufacturers to incorporate HbbTV into all internet-enabled TVs. Presently, the overwhelming majority of TVs available on the market, which viewers acquired during the transition to DVB-T2, are equipped with HbbTV, represented by the red button. This significant shift has notably heightened awareness of HbbTV and its usage. At the moment, approximately 1.4 million households, or TVs, are making use of HbbTV. The figure is indeed significant, and it’s showing a steady upward trend. Concurrently, the time spent on the HbbTV platform is also increasing. Viewers predominantly engage with linear television, and when they desire non-linear content or access archived materials, HbbTV offers them the means to do so.
If my understanding is accurate, HbbTV was initially predominantly utilised for advertising purposes, but it has since expanded to offer additional content for viewers. How do you foresee the future of HbbTV and its potential development?
The future of HbbTV holds significant promise for several reasons. Firstly, it is a European standard, and secondly, it is a service that continually advances in terms of technology. This ongoing evolution enables the introduction of new features and functionalities through HbbTV. An essential aspect for television channels is the ability to replace traditionally broadcasted linear advertisements on linear channels with content delivered via HbbTV. HbbTV provides valuable insights into the viewing habits and behaviour of individuals using these services while seated in front of their television screens. This knowledge allows us to discern their preferences by observing their viewing and usage patterns. Television channels also benefit from this information, enabling them to understand the demographics and preferences of their viewers, thus enhancing the viewer experience. Through the technology we are currently developing, television channels have the capability to replace generic linear advertisements with highly personalised ads that cater to the individual user in front of the TV screen. This level of targeted advertising offers substantial advantages to television networks and naturally leads to significantly improved financial outcomes.
In the advertising sector, this advertising approach is often described as affinity-based advertising. As you highlighted, you consider terrestrial digital broadcasting, HbbTV, and streaming services to be central components of the landscape. Let’s now turn our attention to streaming services, particularly the Video on Demand (VOD) offerings in the Czech Republic. There has been ongoing discourse regarding the potential establishment of a ‘Czechflix’, a notion that has also been acknowledged by your CEO. He suggested that you could serve as a natural partner and operator for such an initiative. In essence, it would function as an aggregator of VoD services available in the Czech Republic, simplifying the user experience by consolidating content from various platforms into one unified place. Is this a feasible concept, and are there any ongoing discussions or negotiations regarding the potential realisation of such a project?
In the Czech Republic, there is a notable preference for local content among television viewers. Czech audiences have a genuine appreciation for Czech content, actors, and television channels, which have been highly successful in generating a plethora of distinctive content that deeply resonates with their audience. This trend is readily apparent in the multitude of new series introduced every season. September, for instance, brings forth a slew of fresh programs and series created by Nova, Prima, and Czech Television. These productions prominently showcase Czech actors and continue to resonate exceptionally well with viewers, underscoring the appeal of homegrown content.
Nonetheless, we hold the conviction that there exists a demand for a platform where television viewers can access the entire catalogue of Czech television content. Given that content is distributed across different channels like Czech Television, Nova, or Prima, an opportunity emerges to devise a solution that consolidates this content and makes it readily accessible to viewers in one centralized location, simplifying the navigation process and enhancing the viewer experience. Indeed, the process of navigating various video platforms can prove to be somewhat daunting for certain viewers. Therefore, we aim to furnish them with a universal tool that simplifies their content discovery and access. This tool can be made available both through HbbTV and streaming platforms on tablets, smartphones, and computers, ensuring a versatile and user-friendly experience. We have strong confidence in the viability of this project, taking into account its technological and business aspects. Our dedicated efforts toward this project are ongoing, and while we are not in a position to divulge precise details at this juncture, we are optimistic about its feasibility and anticipate reaching a successful agreement.
