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well as Internet users a selection of premium TF1
Vision content including American series with the
latest seasons of Fringe, Lost, Grey's Anatomy,
Ugly Betty and TF1 dramas and series. The videos
will be available to rent and customers will be able
to watch them during a 24-hour period.
trol and get billed by their broadband access
provider. Even if subscribers have technically
access to all the services offered on the Internet,
they are subject to what we call “potato couch
switching cost”. The strength of this switching
cost is already reflected in the high market share
of IPTV related VoD services (80% of VoD con-
tent according to (NPA Conseil, 2008).
From Distribution to VoD Services and
Eventually TV Packaging and Content
Orange (France Telecom)
Another major strategic move is broadband access
providers, such as telecom operators and ISPs,
initially only supplying a distribution channel to
VoD service providers, moving to upward stages
of the value-chain (Figure 2). As for TV compa-
nies, there are some differences in their strategic
approach.
IPTV systems significantly increase the mar-
ket power of broadband access suppliers, which
also supply the IPTV box giving exclusively ac-
cess to the services they have selected (Figure 3).
Via the IPTV box, they
de facto
control what is
offered to subscribers. Of course, subscribers still
have the possibility to go to their PC, and access
any website providing VoD services, but they will
have to stand higher transaction costs than if they
remain in front of their TV, use their remote con-
Orange has a very offensive strategy concerning
VoD. This strategy has also extended to audio-
visual services, such as TV channel and content
production. Orange VoD strategy must also be
understood in the context of its overall strategy
of “convergence operator”, aiming at providing
seamless services across IPTV, Internet and mo-
bile channels.
Initially relying on Moviesystem for its portal-
based VoD service, France Telecom has progres-
sively developed its own service, “24/24 video”, by
negotiating directly with content providers. At the
end of 2007, Orange had 7.3 billion subscribers,
of which around 1.2 million have access to IPTV
programs. Its “24/24 Video” service uses its cata-
logue of 3,000 films and 6,000 TV programmes to
Figure 2. Strategic move from distribution to VoD services
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