Nagra: OTT will soon be cheaper than satellite for pay TV

CDN costs are likely to drop by an average of 20% over the next few years, meaning that broadcasters could soon reach a tipping point when CDN will become cheaper than broadcast, according to Thomas Decieux, head of product marketing, multiscreen solutions at Nagra.

Speaking at the Connected TV World Summit in London yesterday, Decieux said that Nagra had looked at the cost of satellite delivery per home versus over-the-top TV via a CDN. Based on a 250 channel bouquet delivered at an average of 4Mbps per channel and 25.5 hours of viewing per user a week, with a transponder cost of US$3 million (€2.3 million) a year and a CDN cost of US$0.044 per GB, Decieux said that for over one million users it is already cheaper to deliver a full bouquet via CDN rather than broadcast it via satellite. He said the economics did not yet work for two million subscriber networks, but that they would soon. Decieux said Nagra had calculated that a pay TV offering equivalent to that of CanalSat, with over five million subscribers, would reach its theoretical tipping point in 2018. BSkyB would reach the same point in 2021 for its 10 million subscribers.

Decieux said that, for new service providers, it made sense to ask whether it would not now make sense to deliver the service over a CDN network.

For existing providers with legacy bases, Decieux said that, for a hypothetical network of two million subscribers, the proportion of channels that will cost-effectively be delivered over satellite as a proportion of the total would diminish over the next 10 years, so that it would ultimately only make sense to deliver a handful of terrestrial over-the-air channels over satellite, with the remainder of the channels delivered over OTT.

Decieux cited the example of the Jazzbox service from Jazztel launched at the end of last year in partnership with Prisa TV. The service was delivered over-the-top using an adaptive bit-rate capable IP set-top. Jazztel had previously looked to IPTV, but then redirected its investment from IPTV to OTT. Nagra hosts the service for Jazztel, which has focused on the CDN, client solution and marketing.