The current trend towards more direct-to-consumer and SVOD services is often thought to be beneficial to consumers. It provides more choice, and platforms are likely to keep costs down in order to attract a sufficiently large customer base. Theoretically, content fragmentation should enable consumers to assemble the most efficient ‘packages’ by purchasing only the platforms that provide the genres and age and quality of content they desire.
There is a strong argument that some ‘disaggregation’ is always good for consumers, but there is an optimum level after which fragmentation could cease to be helpful. Kym Niblock, Chief Product and Information Officer at TVNZ, the New Zealand commercial broadcaster whose large multiscreen presence includes live and on-demand content, sums up the dilemma.
“Studios and content suppliers have alliances that mean that no one outlet can get hold of all the great content and this is ultimately better for customers than the alternative: one output controlling all content, access and pricing. Competition and multiple choice is good, as it means the consumer gets a better deal, in terms of the price and offer, as the various businesses compete for customers.
“Where it becomes complex is when there is so much choice that consumers don’t know where to find content. Finding that one specific thing you are looking for in a VOD catalogue of tens of thousands of shows can be daunting for consumers. It’s clear we haven’t reached an optimal model on content supply, and some of the draconian views on how content windowing works is leading to a very fragmented customer experience.”
Work by the research firm Ampere Analysis finds that a small level of disaggregation may be accepted, or even flourish, as consumers are able to access content from a specific distributor that they particularly enjoy, without having to waste money on content they do not. Hamish McGregor, Analyst at Ampere Analysis, believes there is often too much choice for the majority of consumers to realistically make use of, however.
“Consumers don’t want to flip between multiple platforms to browse content, or to maintain and curate the multiple platform subscriptions,” he argues.
A recent survey by consulting firm PwC revealed consumer frustration at accessing content that was split among a plethora of services. “Entertainment and media companies have long competed on two dimensions: content and distribution,” the report reads. “To thrive in today’s increasingly competitive, crowded, slow-growth marketplace, however, they must focus on a third dimension: user experience.
“Content is getting disaggregated across so many different OTT apps and services that people don’t know where to go to watch what they want to see,” the report concludes. “Platforms should be created with embedded deep searching across all apps, beyond just the one being used, so people can easily find the show they want to watch.”
Javier Lucendo De Gregorio, Main Screen Video Services Manager at Telefonica, the multi-territory fixed/mobile telco that includes the Movistar streaming Pay TV service among its brands, offers his view. “Content owners trying to reach the customers directly, skipping the classical aggregator role in the value chain, is clearly impacting the final consumer, since this implies managing different applications or devices, several accounts, heterogeneous user experiences and above all, probably a higher cost for the user.
“There is also consumer frustration due to the lack of a single view over all the content possibilities and [the lack of] personalised recommendations across the full spectrum [of content]. This can be quite stressful and will increase churn in different platforms.”
Nuno Sanches, Group Head of Fixed Product Development at Vodafone, stresses the positive effect of OTT competition for the consumer, which has resulted in a dramatic increase in content, and also a golden age of TV where production quality has arguably risen to an all-time high. However, he is forced to admit that this has come at a high price.
“The break-up of the traditional Pay TV bundle is driving consumer costs significantly higher. The sum of smaller services is now almost cost-equivalent to a Pay TV bundle,” he argues.
Ingmar Schmidt, TV Business Operations and Proposition Manager at Swisscom, is also convinced that self-aggregation will cost consumers more. “Customers may face higher costs if they wish to gain access to the same level of content they used to have access to previously, in the form of bundles.
“In addition, switching between content may force consumers to switch between different platforms with different experiences and stream qualities. For consumers who are not tech-savvy, this experience may pose problems and generate a lot of support requests. They need to invest more effort and time to get an overview of which content is accessible to them and where.”
Time for some re-aggregation?
Is it time for some re-aggregation of content? Who would make a good ‘super-aggregator’ and can Pay TV operators provide some discounting on bundles of ‘onboarded’ apps to encourage consumers to watch all their content (broadcast, DVR, on-demand and streamed SVOD) in one place? These questions are all tackled in the new Videonet report, ‘How Pay TV can triumph in the post-OTT era’, which you can download here.
The report investigates who will control the best content in future, whether the online video market is ripe for some re-aggregation, and how the Pay TV user experience must evolve if operators are to triumph in the ‘post-OTT’ world. It also looks at the back-office innovations that will underpin the premium entertainment services of the future.
The report contains insights from Ampere Analysis, IHS Markit, NAGRA, Fox Networks Group, Vodafone, Liberty Global, TVNZ, Telefonica, Swisscom, ARRIS, Roku, Technicolor, xRoadMedia and others. It considers the opportunity to bring the best premium content offers under one roof again, why a one-size-fits-all UEX is no longer fit for purpose, and the role of AI and voice services, among many other things
Download Report here.
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