Handelsblatt Exclusive Deutsche Telekom to Launch Streaming Service

Cable providers face growing competition as Germans increasingly turn to the internet for video content. Deutsche Telekom aims to capitalize on the trend with a new streaming service.
Streaming services like Netflix are increasingly popular among viewers.

In the digital age, cable providers are no longer the only game in town when it comes to entertainment. As in the rest of the world, Germans are increasingly turning off the television and turning to the internet for their entertainment.

The digital association Bitkom found that 77 percent of German internet users over the age of 14 watched videos on the web last year. Bitkom estimates that revenue for video-on-demand platforms will grow by 24 percent to €717 million, or $788 million, in 2016.

As cable providers lose their grip on German television viewers, Deutsche Telekom plans to capitalize on their weakness with a new streaming service, Handelsblatt has learned.

The advantage of TV content for us is higher mobile data usage as well as stronger stronger customer loyalty. Markus Haas, COO Telefonica Germany

For €7 a month, subscribers will be able to stream 40 television shows through a mobile app version of the Deutsche Telekom platform Entertain. Deutsche Telekom will unveil the streaming service at the IFA consumer electronics convention in Berlin on Friday.

"We are clearly positioning ourselves against the cable providers with our telephone, internet and television offerings," Niek Jan van Damme, the head of Deutsche Telekom Germany, told Handelsblatt.

The rise of the internet as the central media platform has forced telecom providers to compete in the cable market and cable providers to compete in the telecom market.

Deutsche Telekom's main competitor, Vodafone, purchased Kabel Deutschland in 2013 and gained 8 million cable subscribers. A year later, Telekom began offering bundled landline, cellular, high-speed internet and television packages for a single flat rate.

Deutsche Telekom is only the latest network operator to launch streaming services. In June, Spain's Telefonica announced that its wireless carrier O2 would offer a video and television app. Telefonica says the service has been well received but declined to provide numbers.

 

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In 2015, Telefonica's German customers watched 33,000 hours of streaming video. In the first quarter of 2016, data usage increased by 20 percent to 62 million gigabytes compared to the same period last year. LTE subscribers increased their data usage by 16 percent to 1.4 gigabytes.

"The advantage of TV content for us is higher mobile data usage as well as stronger customer loyalty," Markus Haas, the chief operating officer of Telefonica Germany, told Handelsblatt.

Streaming content makes up a third of Vodafone's data volume. Competitor Unitymedia declined to provide exact figures, but said broadband subscribers consume 80 gigabytes a month, mostly for video.

As the demand for streaming video grows, internet and cellular providers are increasingly partnering with content providers. Deutsche Telekom is working with Netflix with its Entertain platform, which will be the basis for the German provider's new streaming service. Meanwhile, Telefonica is cooperating with Sky and Unitymedia has partnered with the streaming service Maxdome.

"The desire for the best picture quality and the highest level of comfort is increasing and that requires more bandwith," Mr. van Damme said.

 

Ina Karabasz is an editor at Handelsblatt's companies and markets team, covering telecommunications, IT and security issues. To contact the author: [email protected]