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How can the Pay TV industry stay competitive?

Simon Trudelle, Senior Director, Product Marketing, NAGRA
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Pay TV service providers find themselves at a pivotal time where the lines between Pay TV and OTT are increasingly blurred. More than ever, they face the challenge of proactively embracing true digital transformation in order to anticipate the rapidly changing market conditions.

They must also embrace client horizontalization, service virtualization and a data-driven methodology to define and evolve their consumer propositions – all while claiming their super-aggregator role and ensuring continuous solution renewal to keep subscribers engaged and attract new ones.

According to findings from the 2019 Pay-TV Innovation Forum, industry executives are recognising this fundamental need to entirely change their business so they can create and deliver the full range of digital products and services that viewers demand. However, challenges remain, and not just from disruptors or pirates, but from Pay TV providers themselves who are trying to navigate the new digital landscape.

Considering what may appear to be an increasingly challenging environment, how can Pay TV providers stay competitive? Thankfully, the research shows that executives are optimistic about the future.

For example, 70 per cent of executives told the Pay-TV Innovation Forum that they believe the rise of OTT consumption – previously considered as a major Pay disruptor – will have a positive effect on their business, particularly when they can incorporate such services into their own offerings to take on the role of super-aggregator. That includes sports OTT content, where operators can supplement their Tier One sports with Tier Two and niche offerings from dedicated sports OTT content providers. By on-boarding OTT services, Pay TV providers can deliver significant, powerful content offerings whilst driving consumer loyalty and enabling active content monetisation practices within their business.

Data will be key to enabling Pay TV’s transformation into the super-aggregator role. That will only be possible if providers can make best use of it – only 27 per cent of executives surveyed rated their ability to extract value from data to be good or very good. Pay TV has access to a lot of data – but it is often siloed within teams. As John Paul, Managing Director, Emerging Business Activation at Liberty Global, says: “For a non-data-native organisation, you face a much steeper learning curve, moving from measurement to insight.” Instead, management of data and analytics should move to the boardroom and be treated as an enabler to drive real change throughout the business, breaking down silos in the process.

Effective data analytics will help inform operators to stay competitive in one area in particular: pricing and packaging. Cost is often cited as a reason for subscriber churn, particularly amongst younger viewers. 91 per cent of executives agreed that they need to innovate their product pricing and packaging to retain and attract new customers. If operators wish to become super-aggregators and stay competitive, it is imperative that they make changes that will work for their customers with pricing and bundles to match every type of consumer.

Russell Stopford, Chief Digital Officer at Paris Saint Germain FC, believes this is particularly important in sports if providers want to keep consumers engaged: “Sports broadcasting is increasingly about how we can package up the whole pre-match, in-match, half-time and post-match experiences – as well as how we engage fans during the four, five, or even six days a week when football is not being played.”

It is not necessarily going to be a smooth process, and operators will need to experiment with a range of packages to meet viewers’ needs and behaviours.

If operators fail or simply ignore this challenge, then it is likely they will face one of their biggest ongoing challenges – commercial pirates. Unlike free illegal services, commercial piracy presents itself as legitimate, taking revenue and, crucially, content from operators. With 17 per cent of households globally using illegal TV services, up from 11 per cent since 2017 alone, it is imperative that operators act now to stop them if they want to maintain a competitive edge. Competitive pricing, bundling and analytics to support their business, coupled with effective technological, legal and legislative anti-piracy activities will help them to achieve this goal.

These are broad issues that concern all operators. As an industry, we must share knowledge to help identify the threats and realise the opportunities if we’re to survive.

As we enter the era of active content monetisation, service providers will have to rely on a combination of data analytics, new bundling strategies, smart content curation and anti-piracy strategies to stay competitive. Transforming their business models by delivering the full range of digital products and services that viewers today demand while enabling innovation will be key.

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