Creating Market Disruption: Tale of Two Companies


Creating Market Disruption: Tale of Two Companies

By Rich Tehrani, Group Editor-in-Chief, TMC  |  May 04, 2015

The VoIP market literally revolutionized the way communications worked – allowing, among other things, a company to provide over-the-top services that were decoupled from the phone company. For the first time, you could go out and buy broadband from one company and phone service from another.

The poster child for this movement in the U.S. was Vonage (News - Alert), and the company did a great deal for the fledgling VoIP market at the time. Thanks to Vonage, AT&T launched a competitive service, called CallVantage, out of fear. Cable companies soon realized they needed to offer triple-play packages, and phone companies realized they needed to be broadband and video providers.

In short, Vonage helped shape the broadband and related information services market we enjoy today. Consumers were able, for example, to ditch $70 a month bills for a PSTN line in exchange for $20 DSL and $15 phone services. They saved 50 percent and got broadband as a bonus.

Fast forward just over 10 years and many of the same people who brought you the incredibly disruptive Vonage phone service are back, and they’re ready to take on a new market with an equally disruptive model: YipTV. The primary idea behind the YipTV service is how $15 per month will give you access to a wealth of television channels produced initially for markets outside the U.S.

The premise of the company is simple. Content providers are finally stepping away from cable and satellite providers to provide programming directly to consumers. Until now, there hasn’t been a central interface to access all this content. It really makes no sense for a user to have individual apps for each channel they watch. In my opinion, this is the wrong way to go about accessing video content on every device ranging from a set-top box to a laptop to a mobile device. That’s where YipTV comes in with its goal of offering consumers personalized choices of programs they want to watch on an OTT basis for $15 per month.

YipTV aims to do one thing well – it will provide lots of live and eventually on-demand content to users through mobile apps as well as HTML5 support for web browsers.

In beta as I was writing this in March, YipTV delivers 35 live channels with another 136 coming soon. YipTV plans to have many more after that.

I asked Michael Tribolet (News - Alert), the chairman, co-founder and CEO of the company, about Chromecast and what a great enabler it is for his platform. He agreed, adding that Apple (News - Alert) TV is as well. Really, any connection between a phone or computer and TV will benefit the company.

VoIP services like Vonage took off because they were cheap. Consider today if people want to access channels from their home country of Argentina, for example, they might have to pay more than $100 to buy a bundle of channels and then add on a package for a specific country. The average cable bill is $140 or so, meaning that YipTV will cost about a tenth of the competition. Moreover, it will allow the content to be displayed on any device. Your cable provider sort of does this as well, but it is a challenge and most of the content can’t be viewed out of the house. You can buy a Slingbox, but that introduces another layer, another cost, and another hassle.

In addition, many of the customers of a service such as YipTV are prepaid when it comes to their phone bills  – they buy their credits at a local bodega. YipTV plans to be available in the same retail locations. Moreover, they think they will appeal to cord cutters as well as people who could never watch cable. Parents who want to share their local children’s programming with their kids in the U.S. can now access YipTV to do exactly that.

In short, YipTV brings the same disruptive ideas to video delivery that Vonage did to telecom. I wrote in 2010 that TV disruption will happen more slowly than you think because of the $32 billion per year of affiliate fees. While this is still the case, the market is changing as content providers have decided they can have their cake and eat it too. Consumers are willing to pay more to access the content they want on the go. Finally, YipTV will have such a low price point that it will be a no-brainer for anyone who is interested in getting access to a massive amount of content at a low cost.

Edited by Stefania Viscusi
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