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How can the Pay TV industry overcome disruption in Europe?

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The European Pay TV market is transforming.

Two trends in particular have brought about significant disruption – the widespread availability of cheaper OTT services and the growth of non-linear content consumption.

At the recent Pay-TV Innovation Forum, industry experts said they expected future growth to be driven by consumers taking up skinny bundles, personalised packages and seamless multiscreen experiences, rather than increasing prices of traditional Pay TV services. Moving forward, there are three areas of innovation pay-TV providers should prioritise.

The first is next-generation content aggregation and discovery.

As the volume of available content continues to grow, Pay TV providers will need to deliver a seamless discovery experience. For Laurent Perchais, Head of Strategy, Content Division at Orange, Pay TV providers can play a key role in aggregating OTT services, becoming a central gateway to all content for consumers.

He says, “[Orange’s] vision and conviction is to be a content aggregator. We want to be the right partner for content providers, promoting and selling their content to consumers and delivering a great user and customer experience.”

He continues, “The alternative model of vertical integration is much more risky, often requiring huge investment in content assets and delivering low returns, particularly in terms of telco KPIs, which are growth of broadband subscriber base and ARPU. I’m confident that content aggregation is the better model. However, many companies today, not only telcos, are pursuing this model and trying to become the aggregator of choice.”

And it’s not only telcos joining the race. Pay TV providers also face competition from new device and app ecosystems like Amazon, Roku and Apple TV, plus other ecosystems offered by smart TV set manufacturers.

The second key area of innovation for Pay TV providers is advanced advertising and data.

Addressable advertising and dynamic ad insertion could help pay-TV platforms generate new revenues from advertising in light of declining subscription revenues. Although only Pay TV providers with their own channels can really sell ad space, the rise of multiscreen and IP delivery will make it possible for Pay TV providers to alter the landscape (Sky’s Adsmart, for example). Advanced TV advertising could be a crucial space where Pay TV providers are able to challenge digital giants.

Based on Pay-TV Innovation Forum survey findings of global Pay TV industry executives conducted in Q2-2017, 75% of respondents believed targeted or personalised advertising will be the Pay TV business area that benefits from the application of data and analytics over the next five years. And it doesn’t necessarily have to stop at advertising – data could also be used for optimising infrastructure and content delivery, product development and much more. But in order to succeed, Pay TV providers first must find ways to collaborate closely with content owners and broadcasters.

The final area of focus should be seamless multiscreen TV services.

While it’s true that more than 90% of Pay TV operators in the EMEA region have rolled out TV everywhere services, there is still scope to improve the experience. A great way to do this is to make it an integral part of the Pay TV offering – in terms of functionality, user interface and the available content.

This is seen as one of the primary ways that the Pay TV industry can successfully compete against OTT services and adapt to evolving consumer behaviour. As Alexander Sacher, CTO at HD Plus, summarises, “The Pay TV market is developing rapidly and becoming increasingly more diverse.

Growing competition and changing consumer demand mean that both established and new Pay TV providers need to find ways to optimise their content offering… and ensure that they can deliver a high-quality user experience across multiple consumer devices and apps.”

To succeed in this period of uncertainty and disruption, the Pay TV industry needs to learn from the new breed of digital-first and data-led OTT service providers. They also need to transform, becoming more agile in their approach to meeting consumer demand. That means not just “doing OTT and multiscreen”, but also managing multiple business models to address the needs of a segmented TV market – a place where TV “traditionalists” and younger generations of content “bingers” coexist, often within the same household.


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