When hearing about the significant growth of the connected TV (CTV) market, the prevailing conclusion is that it benefits streaming services. According to Statista, 88% of U.S. households have at least one CTV device. They also reported that nearly 74% of UK households own a smart TV and the share of German households with a smart TV was 96% in 2023. The rise in the popularity of streaming services is attributed to consumers wanting to easily access streaming services, hastening the demise of traditional pay-TV services.
While this is undoubtedly true, this perspective overlooks the unique strengths of traditional pay-TV providers and the broader media and entertainment industry.
Today, the CTV market is largely owned by the top TV manufacturers and their own in-house TV operating systems, along with some that feature third-party operating systems like Roku, Amazon Fire TV and now TiVO OS. Smart TVs are effectively replacing the set-top box - and everything that goes with it, including data. These TV manufacturers use automatic content recognition (ACR) to collect consumer viewing habits, location and service provider information. This data is then used to personalise ads and content recommendations, which explains the affordability of many CTVs.
CTV manufacturers are positioning themselves as the power player in the rapidly growing digital video advertising market. According to IAB’s 2024 Digital Video Ad Spend & Strategy Report, CTV ad sales are expected to grow by 12% to $22.7 billion in 2024, 32% faster than total media overall. It is considered a “must buy” in the programmatic digital market mix. This trend is clearly edging out traditional TV advertising.
With the power and control of consumer data leaning heavily towards CTV manufacturers and streaming services, some traditional pay-TV providers are getting creative. In 2021, Sky introduced a new approach with Sky Glass TV, a smart TV and streaming service bundle that doesn’t require a satellite dish or set-top box, but relies on the consumer’s broadband connection.
With Sky Glass TV, Sky now owns the entire entertainment experience and has a direct relationship with its customers. It has opened up a new world of how to consume and interact with TV. Amazon has entered the market with its Fire TV Omni Series, and Samsung launched its own streaming service hub called Samsung TV Plus. Major players are looking to own the content and the hardware that delivers it.
But what sets Sky Glass TV apart is that as a traditional satellite TV provider, they are arguably the most experienced with this type of model. They own the hardware, deliver a comprehensive range of content, manage the billing relationship, and provide customer support. Additionally, they now own additional viewer consumption data, opening new monetisation opportunities.
Let’s take this further. What if more pay-TV providers started offering these all-in-one entertainment service bundles? Not all operators have deep pockets like Sky, so imagine if the CTV model resembled the set-top box model where a provider could select a CTV with its preferred chip and offer its branded service through a third-party TV OS. Sound familiar?
The advantages for operators owning both hardware and content are clear:
Control over the viewing and navigation experience: Personalised recommendations and super aggregation across content and apps.
Brand loyalty: The operator’s brand is the first thing viewers see when turning on the TV, eliminating competition with a native OS on a CTV. This model could also include multi-year contracts, similar to mobile phones.
Monetisation of consumption data: As noted, CTV advertising is a lucrative segment.
Viewers can win in this scenario as well:
Better device experience: They have access to new smart TV technology through an affordable package.
Enhanced TV experience: Easier to navigate and interact across all live and VOD content.
Single point of contact: Simplifies the process for consumers, as they know who to contact for technical support and billing inquiries.
This model holds significant potential and is particularly exciting for pay-TV operators who have been gradually marginalised during the streaming wars and the rise of CTV. Clearly many stars would need to align for this model to work. But once CTV manufacturers are in place and the TV OS provides the right amount of flexibility, it can really scale to give each operator a unique offering to regain some control in their market.
The biggest challenge might be deciding what to call it. TV-in-a-box? All-in-one Entertainment? Or maybe simply Pay TV.
24i is dedicated to shaping the future of media profitability. Specialising in crafting valuable, scalable and customisable D2C and pay TV consumer offerings, the company is guided by its resilient, remarkable and change-ready team to reimagine the streaming landscape and how to connect viewers with the content they love.
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