Thursday, September 18, 2014, 10:03 AM ET|Posted by Will Richmond
Here's more evidence that over-the-top video may be pay-TV's friend, not its foe, as conventional wisdom holds. As reported by Broadband TV News, YouTube is enjoying early and widespread success since its recent launch by pay-TV operator UPC Hungary to hundreds of thousands of subscribers there.
Unveiled at the end of May as part of UPC Hungary's first phase rollout of multiple online apps, YouTube is already generating over a million minutes per day of viewing by UPC Hungary subscribers, the highest among the 20 different apps now available.
Underscoring how sticky YouTube is, UPC Hungary said the average session length is 45 minutes. About half of those who can access YouTube have already done so at least once, and more than half of them have become repeat users. Given this early success, UPC Hungary said it will rollout YouTube and other online apps to all of its digital cable subscribers by end of 2014.
UPC Hungary is offering YouTube via its existing set-top boxes, using ActiveVideo's CloudTV technology. Last September, ActiveVideo signed a broader deal with Liberty Global, the largest European pay-TV operator and parent of UPC Hungary, which is in turn the largest operator in Hungary, with almost a million video subscribers.
ActiveVideo uses cloud-based processing to deliver HTML5 experiences to a wide variety of existing set-top boxes and connected TV devices. Just last week ActiveVideo announced that HBO Europe will be using CloudTV to deliver HBO GO to existing set-top boxes.
YouTube's early success with UPC Hungary subscribers further blurs the pay-TV/OTT divide. While it's very plausible that OTT will drive cord-cutting and cord-nevering for some, it's also credible that pay-TV operators can actually benefit from OTT's rise by seamlessly offering it alongside traditional multichannel services. This is the argument that Netflix has been making, with some early success, to pay-TV operators all over the world.
Indeed, as I wrote back in May, with the explosion of online originals (which some viewers already prefer to traditional programming), and the surging adoption of connected TV devices, pay-TV operators may be wise to embrace more holistic video distribution strategies that encompass select OTT services.
Certainly there's no disputing YouTube's massive global popularity, and UPC Hungary's early experience suggests there's strong latent demand for easy TV-based access. As more proof points like this emerge, other pay-TV operators will no doubt be revisiting their strategy of how to incorporate OTT video to their services as well.