Distributors say new platform too expensive
Nowa Cyfra+ to be available March 1
Canal+ Polska last week pitched Nowa Cyfra+, the new digital TV platform born of the recently merged Wizja TV and Cyfra+, with high expectations despite a tough economy and stiff competition.
"Our goal is to achieve 800,000 subscribers by the end of this year," said Jakub Brzeczkowski, Canal+ Polska's chief operating officer. "Our shareholders expect us to reach a 1 million customer base by 2004. We have about 700,000 subscribers now, including 50,000 analog clients."
But Poland's stagnant economy and growing unemployment rate could make it difficult for Canal+ to rapidly increase its number of digital platform subscribers, industry officials said."At the moment there are many customers who are returning Cyfra+ decoders," said a licensed Cyfra+ distributor from Kraków who asked not to be named. "Why? The subscription fees are too high. Customers are also concerned about the merger. I think their numbers could grow faster if they were cheaper."
Brzeczkowski said the decoder returns stem from a strict new payment policy.
"It's true that distributors can report returns of decoders because six months ago we started switching off clients who weren't paying," he said.
According to a Cyfra+ distributor in Warsaw, it will be difficult to find new customers in big cities who are part of Nowa Cyfra+'s target group.
"Digital platforms cannot expand in big cities anymore because cable TV is cheaper and cable networks are being installed in most new residential areas," he said. "And the subscription fee for digital TV has been and still is too high."
Under the new offer, available March 1, Nowa Cyfra+'s customers can choose from four kinds of packages paid on a monthly basis: "white" - zł. 56; "silver" - zł. 86; "gold" - zł. 93; and "platinum" - zł. 119. The platform's local distributors have expressed concern that the basic package doesn't include movie channels such as HBO or Canal+ Multiplex, and that some popular thematic channels, like National Geographic, are included only in gold and platinum packages. "Right now you either get everything expensively or practically nothing, though cheaply," said a distributor from Kraków.
CanalSatellite, Canal+'s French digital platform, offers twice as many thematic channels in its basic Thematique package for about 18.
Brzeczkowski defended Nowa Cyfra+'s prices. "At Wizja TV, the lowest subscription started at zł. 67 and in Cyfra+, zł. 54," he said. "Please don't compare cable TV prices with us because we offer digital, and therefore better broadcast quality." More numbers in question
Canal+ is already raising questions about subscriber numbers. Brzeczkowski wouldn't reveal the number of pre-merger subscribers for Wizja TV and Cyfra+, saying that calculation methods are complicated and the final result - 700,000 - may be off by 10-15%.
But according to a memorandum signed last year by the owners of Poland's soon-to-merge platforms, Amsterdam-based United Pan-Europe Communications (UPC) and Vivendi Universal, Wizja TV had 320,000 subscribers and Cyfra+ 280,000. According to UPC's 2001 third-quarter results, Wizja TV's subscriber base slumped to 311,000. At the same time, Vivendi, which controls Canal+, estimated that in September 2001 its Polish platform had 265,000 subscribers. If Nowa Cyfra+'s subscriber base is lower than the official figures released by Canal+ Polska, the company may have to look for ways to make up ground in a hurry.
Christian Kozar, Canal+ Polska's CEO, quashed market rumors that his company was in talks with Zygmunt Solorz, owner of Poland's largest private TV station and the Polsat Cyfrowy digital platform, which has 200,000 subscribers. "We're not in talks," he said. "Our targets differ and we really want two platforms to exist in Poland. I told Mr. Solorz that we're not going to absorb everything on the market."
But some market insiders said that an offer from Solorz may be tempting, especially now that Nowa Cyfra+ needs more subscribers and Solorz holds the rights to broadcast the World Cup this summer.
"But sport rights (for the World Cup) are of no interest for pay TV; it's only one month," Kozar said. "It may be interesting only for free-to-air TV."
Cyfra+ and Polsat Cyfrowy distributors were also skeptical about such a merger.
"Polsat Cyfrowy's customers come from poor regions and not from big cities so I don't believe in a merger with Nowa Cyfra+," said one Warsaw distributor.
Solorz also moved to dispel market speculation.
"There are no negotiations (with Canal+) and as far as I know they are not interested in the world championship rights," he said. "It's also true we have different subscribers as we dominate small towns. We're cheaper. While we cannot have movie channels such as HBO or Canal+ on our platform because of their exclusive contracts with Nowa Cyfra+, we'll focus on pay-per-view services and we'll keep our prices low."
"Our goal is to achieve 800,000 subscribers by the end of this year," said Jakub Brzeczkowski, Canal+ Polska's chief operating officer. "Our shareholders expect us to reach a 1 million customer base by 2004. We have about 700,000 subscribers now, including 50,000 analog clients."
But Poland's stagnant economy and growing unemployment rate could make it difficult for Canal+ to rapidly increase its number of digital platform subscribers, industry officials said."At the moment there are many customers who are returning Cyfra+ decoders," said a licensed Cyfra+ distributor from Kraków who asked not to be named. "Why? The subscription fees are too high. Customers are also concerned about the merger. I think their numbers could grow faster if they were cheaper."
Brzeczkowski said the decoder returns stem from a strict new payment policy.
"It's true that distributors can report returns of decoders because six months ago we started switching off clients who weren't paying," he said.
According to a Cyfra+ distributor in Warsaw, it will be difficult to find new customers in big cities who are part of Nowa Cyfra+'s target group.
"Digital platforms cannot expand in big cities anymore because cable TV is cheaper and cable networks are being installed in most new residential areas," he said. "And the subscription fee for digital TV has been and still is too high."
Under the new offer, available March 1, Nowa Cyfra+'s customers can choose from four kinds of packages paid on a monthly basis: "white" - zł. 56; "silver" - zł. 86; "gold" - zł. 93; and "platinum" - zł. 119. The platform's local distributors have expressed concern that the basic package doesn't include movie channels such as HBO or Canal+ Multiplex, and that some popular thematic channels, like National Geographic, are included only in gold and platinum packages. "Right now you either get everything expensively or practically nothing, though cheaply," said a distributor from Kraków.
CanalSatellite, Canal+'s French digital platform, offers twice as many thematic channels in its basic Thematique package for about 18.
Brzeczkowski defended Nowa Cyfra+'s prices. "At Wizja TV, the lowest subscription started at zł. 67 and in Cyfra+, zł. 54," he said. "Please don't compare cable TV prices with us because we offer digital, and therefore better broadcast quality." More numbers in question
Canal+ is already raising questions about subscriber numbers. Brzeczkowski wouldn't reveal the number of pre-merger subscribers for Wizja TV and Cyfra+, saying that calculation methods are complicated and the final result - 700,000 - may be off by 10-15%.
But according to a memorandum signed last year by the owners of Poland's soon-to-merge platforms, Amsterdam-based United Pan-Europe Communications (UPC) and Vivendi Universal, Wizja TV had 320,000 subscribers and Cyfra+ 280,000. According to UPC's 2001 third-quarter results, Wizja TV's subscriber base slumped to 311,000. At the same time, Vivendi, which controls Canal+, estimated that in September 2001 its Polish platform had 265,000 subscribers. If Nowa Cyfra+'s subscriber base is lower than the official figures released by Canal+ Polska, the company may have to look for ways to make up ground in a hurry.
Christian Kozar, Canal+ Polska's CEO, quashed market rumors that his company was in talks with Zygmunt Solorz, owner of Poland's largest private TV station and the Polsat Cyfrowy digital platform, which has 200,000 subscribers. "We're not in talks," he said. "Our targets differ and we really want two platforms to exist in Poland. I told Mr. Solorz that we're not going to absorb everything on the market."
But some market insiders said that an offer from Solorz may be tempting, especially now that Nowa Cyfra+ needs more subscribers and Solorz holds the rights to broadcast the World Cup this summer.
"But sport rights (for the World Cup) are of no interest for pay TV; it's only one month," Kozar said. "It may be interesting only for free-to-air TV."
Cyfra+ and Polsat Cyfrowy distributors were also skeptical about such a merger.
"Polsat Cyfrowy's customers come from poor regions and not from big cities so I don't believe in a merger with Nowa Cyfra+," said one Warsaw distributor.
Solorz also moved to dispel market speculation.
"There are no negotiations (with Canal+) and as far as I know they are not interested in the world championship rights," he said. "It's also true we have different subscribers as we dominate small towns. We're cheaper. While we cannot have movie channels such as HBO or Canal+ on our platform because of their exclusive contracts with Nowa Cyfra+, we'll focus on pay-per-view services and we'll keep our prices low."
