Hikari TV Gaining Critical Mass
NTT’s IPTV service, branded Hikari TV and operated by NTT Plala, has surpassed our forecasts and beat company targets with more than 700,000 users at end-May 2009. Company management expects this number to grow to 1.1 mil. by March 2010, at which point the Hikari TV business could turn breakeven with profits flowing from 2011 onwards.
Hikari TV had 550,000 users at the end of March this year.
Close to 60% of Hikari TV customers are opting for the “Oeuchi-Plan” at a monthly fee of ¥3,675/US$39. Subscribers to this plan get more than 50 pay-TV channels and free access to a video-on-demand (VOD) library of over 5,000 titles, as well as, for FTTH/NGN broadband users in Tokyo and Osaka, HD terrestrial channels.
The other ~40% of users either buy basic tiers of 10 TV channels plus free VOD and HD terrestrial at ¥2,625 per month or 53 channels plus subscription VOD. The services are aggressively bundled with NTT's broadband FTTH services, which is adding ~2.5 mil. net new subs per year. NTT's video services are offered at a discount to market leaders such as J:COM.
Next up: HD DVRs, part of a bid to repliacate J:COM's growing success with HD DVR STBs as well as more BS content. Management also intend to improve churn, currently averaging 10 - 20,000 users per month because of retail buy through.
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