We all know the European Pay TV industry is undergoing transformation on all fronts – from IP migration to the latest anti-piracy measures. But what about the thing subscribers actually tune in for – the content they watch?
That very question was discussed at the latest Pay-TV Innovation Forum, the global research programme for senior Pay TV and content executives. Executives from across Europe offered their views on the future of Pay TV content – what will viewers be watching? Where will content come from? And how will operators ensure content reaches the right audience?
Whatever we’ll be watching, it’s less likely to be via linear broadcast.
Dr. Randolph Nikutta, Leader Interactive High End Media at Telekom Innovation Laboratories, says that “customer and market trends show that linear TV is further declining, as fewer people watch live TV. Customer demands and expectations for content and service experiences are growing, so you have to serve a wider range of use cases and user needs”.
In fact, more time spent trawling through Netflix may continue to encourage the growth of foreign content. Wim Ponnet, Chief Strategy and Commercial Officer at Endemol Shine Group, explains: “In the English-speaking world, people were traditionally more averse to watching things with subtitles, but the younger generation is very comfortable with watching foreign language content – think of Narcos, or Dark, the first German series commissioned by Netflix.
“90 per cent of that content consumption was outside of its home market and it got huge viewership in the US and Brazil”, he continues.
Not that more niche content will fall by the wayside. Wim Ponnet asserts that “local content is still incredibly important as a differentiator for both Pay TV and OTT providers.”
And for Ponnet, another factor that will figure in the coming years is the rise of non-scripted content: “It is still at the beginning of its journey, but we will see a lot of interesting non-scripted formats working well for challenger platforms”, he says.
“It cannot be that Grand Tour, for example, is the only big non-scripted format on streaming services. There is going to be a lot of consumer demand in this space and we see, on a fairly regular basis, the re-imagining of some of our existing formats working well on streaming platforms.”
Ponnet also expects more collaboration between traditional players and streaming services to create new content.
“Sky Atlantic and Amazon already have co-production deals on some of [Endemol’s] shows, such as Tin Star where Sky Atlantic gets rights in one of their markets and Amazon gets rights in all the other markets outside of Sky’s footprint.”, he says.
“Given how well European content is doing and travelling, we expect to see more of these types of deal, but the industry still needs to find a model for collaboration in that space”, he continues.
Ultimately, quality content is going to be the key differentiator. As Wim Ponnet notes: “It is fairly easy to launch an OTT platform and reach a lot of users. To do it at scale and successfully is by no means simple, but ultimately, the content and access are going to make the difference here. There’s never been a better time to be an intellectual property owner or a creative engine than now”, he concludes.
Of course, it’s all well and good creating great content, but how can operators make sure it reaches the right audience? Dr. Randolph Nikutta says that, because content is the biggest cost item in TV operations, “It’s natural you look how smart analytics can improve economics there too.”
He continues: “When you buy new content, you can use advanced video indexing services like those from IBM Watson to test the generated rich metadata that describes that content against the preferences of your user base, to calculate if the content will be of interest or not.”
That said, the recommendation engines approach, while a key differentiator for Netflix, may not prove as effective in the coming years. Dr. Nikutta says, “We are currently seeing the limits of recommendation engines. The model of ‘you saw that, you might want to see this’ is not really improving the user experience anymore when it comes to content choice.”
He continues: “Personalisation is a lot more than just recommendation. It could also mean that your user interface is much more adaptive, displaying only what is relevant to a specific user.
“Looking ahead, a lot of different contextual factors will have to be taken into consideration, including mood, needs, standards of living, day of the week, and time of the day. These all come into play with more radical personalisation.” He concludes, “For content, you have to become more selective, and carefully monitor that content investments are paying off.”
But can new technologies like big data and artificial intelligence improve the actual process of content creation? Wim Ponnet, for one, isn’t sure. “Content production is still a highly creative process that can’t be entirely automated or engineered, and, in my view, it will never be.”
He concludes: “Technology will help us in developing story lines and will open new ways of storytelling. But I definitely don’t see the age yet where the computer is going to take over and do the whole creative process for us.”
In the context of the global Pay TV industry, it’s clear that new investment priorities are emerging to address important issues, ensuring the future success of Pay TV service providers.