The Pay TV industry has been talking about digital TV for well over two decades now, to the point where “digital TV” and “TV” have essentially become synonymous.
But are they? How “digital” is digital TV really?
That depends on which perspective you take and which aspect of digitisation you want to focus on. If we look back over the history of Pay TV, we can begin to establish a sense of where we are today in terms of digitisation.
In the 90s, Pay TV was born into an analogue world – from production and aggregation to delivery and consumption. Just as crucially, the business model was analogue, too.
But at the turn of the century, the Pay TV industry saw its steepest growth curves while embarking on a massive digitisation wave. However, that wave mainly referred to the technology components along the end-to-end production and delivery chain.
Nonetheless, this digital transmission enabled us to deliver video-over-bits and increasing bandwidth on all media. It also improved encoding efficiency and brought us significantly higher picture quality. But on the business model front, the transformation was, in hindsight, not that profound.
Barring a (very) modest start of VOD and semi-interactive services like PPV, the business model hardly evolved from the original incarnation of Pay TV.
But today, that’s all set to change. We’re now about to enter a new era altogether; one characterised by another profound technological evolution.
This will largely be defined by the increasing virtualisation of the delivery and service creation environment, alongside the rapidly growing importance of data-driven principles to define and evolve those services, solutions and propositions. But the crucial point to note here is that this time the business model is also transforming.
The reason for this is that two key trends mutually reinforce each other: the fact that OTT has permeated the core of Pay TV (to a point OTT has become a misnomer altogether) and an evolving set of behaviours and expectations on the consumer side; most notably the convenience of service discovery and consumption.
Essentially, this may well be when Pay TV goes truly digital.
So what does this mean for the industry? Well, we may see the pendulum swing away from the increasingly segmented and personalised landscape where empowered consumers create their own bundles. After all, if this continues at the current rate, we’ll soon enter a bonanza of OTT add-on services that is just too daunting and confusing for the consumer.
This in turn will almost certainly lead to a new wave of re-aggregation; and smart service providers must position themselves in that role before others do.
In these pivotal times, it’s important to reflect on what really defines the success of an industry.
During the first digitisation wave, the credo was “meaningful aggregation”. This is what made consumers buy and keep Pay TV packages. And the truth is, the same credo applies today.
The winners will be those who respond in a way that delivers valuable propositions into the evolving consumer behaviour landscape and matches growing expectations.
It does, however, also require a fundamental rethink of the user experience, allowing for smarter content discovery and smarter catalogue management. This must, in turn, transform an increasingly fragmented content landscape into a gratifying experience. It must also address all generations and user types, not just millennials.
Just as importantly, the service concept cannot be static. It will have to fully embrace continuous solution renewal that matches the exponential speed of the Internet, evolving in a data-driven way and tapping into short feedback loops from evolving consumer behaviour. This, ultimately, will be what grows the consumer base while increasing both consumer satisfaction and content ROI.
Pay TV is on the verge of its most significant digitisation wave yet – operators have to act now if they want to catch it, and not sink beneath it.