Golan Telecom Ltd. is planning to offer a very cheap basic television package, to which the consumer can add whatever packages of channels he wants for a fee. This format is very different from that of Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), which is based mostly on a VOD library, while resembling what is currently offered by Hot Telecommunication Systems Ltd. (TASE: HOT.B1) and DBS Satellite Services (1998) Ltd. (YES).
In recent months, Golan Telecom has been planning its entry into the television field and triple package fields. Conversations with content companies indicate that Golan Telecom is trying to buy content from content suppliers through a profit sharing model. Not all the suppliers are willing to sell content through this method; some are demanding part of their payment in cash in advance.
According to the model of Golan Telecom, it is planning to compete directly with HOT and Yes by offering the same product, including VOD, but at lower prices, in contrast to Cellcom, whose television services are unsuitable for some viewers, such as sports fans and those looking for niche channels.
The lesson from Cellcom's entry into the television market and the fact that it is not achieving a great deal of success with its product is that it is very difficult to change television viewing habits in Israel because of the viewers' high level of involvement, in contrast to the cellular market, for example, where the customer is indifferent to who is providing him with the service.
In television, the supply of the content he is receiving is very important to the viewer, and Golan Telecom realizes that in order to compete with HOT and Yes, its product must be just as good as theirs, and cheaper. In France, Free, Golan Telecom's parent company, markets its convertor as supporting 4K, and it is therefore possible that as a gimmick, Golan's convertor will also support this technology.
Market estimates are that Golan Telecom's price for a basic package will be NIS 49, but these are only rumors, to which Golan Telecom is not responding. This, of course, raises the question of how much Golan Telecom's triple package will cost. It appears that here, Cellcom has managed to set a very low level with a NIS 149 price tag for a triple package - a move that can be interpreted as a blocking measure.
Golan Telecom will therefore have to enter the market with a similar or lower price than Cellcom's, while offering more attractive content, in order to generate another revolution in the market. It is believed that Golan Telecom will enter the market in the coming months, and up until then, we will probably see steps taken by the players in the market in order to pose obstacles to Golan Telecom. In contrast with what has happened in the cellular market, where the veteran companies were complacent, this time, they all know that Golan Telecom is planning a big move that will change the rules for competing in the market.
Published by Globes [online], Israel business news - www.globes-online.com - on May 27, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015