Starmax HD, Spain's new satellite TV operator, says it will launch services by end March, pushing an innovative business model in an attempt to kick-start the recalcitrant Spanish pay TV market. Doubtless influenced by its managing director, the former CEO of Polish pay TV platform 'n', Starmax will try a pay-as-you-go business model allowing consumers to pay monthly with no contract. Retail set-top boxes made by Ferguson will feature DVR functionality and come with USB ports and Internet access allowing streaming content. Conax will provide the encryption for the cards and Globocast the aggregation, encryption and delivery of the full bouquet of channels. The initial channel package will include all the DTT channels in Spain plus some thematic channels with HD content, with a price point under €15. Starmax has already struck carriage deals with: BBC Entertainment, FilmBox, FilmBox España, KidsCo, CTK, XTRM, SOMOS and Natura and HD channels like Discovery World, Eurosport and MGM.
Spain is one of the European countries with the lowest pay TV penetration, standing at just 28 per cent of TV households. Aware of the difficult TV climate, Starmax is trying a new formula to attract commitment-phobic costumers previously reluctant to subscribe to any pay TV service. The key differentiation is the use of pre-pay viewing cards. The consumer will not need to commit to a contract and for a low price (€10-€20) he will be able to get a selection of pay channels including HD content. This model has already been used in Poland with great success by Telewizja na karte, owned by ITI Neovision, which also owns the digital satellite platform 'n'. The Polish service launched in October 2008, and reached 322,000 active cards at end 2010, representing 2.4 per cent of Polish TV households. It has built this market share despite competing with four other satellite operators in Poland.
The 'low-pay' approach and lack of necessity for a contract may just prove a winning formula in the Spanish market, especially if Starmax can negotiate top-up access to top league soccer through Gol TV, which is already available to DTT homes in the country. But one of the biggest challenges the platform will face will be piracy, which remains a big problem for content owners in Spain. The inclusion of streaming access in the Starmax box, which should allow access to catch-up content from the major broadcasters, could go some way to tackling this issue. Another key element of the new platform will be the HD channels available in the package like Discovery World, Eurosport and MGM. More than half of Spanish TV households own now a HDTV set and most of the HD content is only available via premium satellite operator Digital Plus.
The combination of low prices, no contract and HD content could give Starmax a few hundred thousand subscribers in the country in the next few years, and if it does get a deal with soccer rights holder Mediapro and its sports channel Gol TV, the subscriber growth could be even stronger.
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