The future of pay-TV

76% of providers believe innovation is a top priority, citing the launch of new products and services as core to maintaining and growing their businesses in competitive marketplaces.

Mike Kerr (Managing Director, Asia, beIN Asia Pacific): I think content piracy is the biggest challenge that we face in the video industry today. It is very hard to compete against free. Levels of piracy are growing, but the industry is slowly catching up. I think the technology advancement works both ways. The technology that is enabling people to pirate content is improving, but so is the technology that will enable the industry to track pirates down and stop them.

How is the industry responding to this threat?

Ron Wheeler: It varies significantly by country, but I think the Police Intellectual Property Crime Unit (PIPCU) in the UK is a great model to follow. It has been in place for four years now and has become a well-oiled machine coordinating UK government anti-piracy enforcement efforts, as well as advocating for other jurisdictions to do the same.

Jimmy Chen: Currently we are working with various industry associations to monitor consumer trends, including reviewing online discussions about pirated content on public forums and collecting data on piracy-related activities. We can then share this information with content providers, so that they can investigate these activities further, involving the respective government authorities and taking legal action as required.

Michael Hartman: There is no silver bullet – it is a problem that we need to combat using a multi-faceted approach, including industry coordination, technological solutions, legal action, lobbying, and education. When multiple companies get together it enhances their ability to do lobbying to improve laws and drive governmental enforcement, where appropriate.

Another key driver of innovation has been the rise in competition from OTT platforms. How much influence have they had?

Jimmy Chen: We’re seeing additional growth in OTT viewing, which is the biggest change for regional pay-TV service providers today. The younger generation prefers watching OTT shows, such as Chinese and Korean dramas, and want to access content through their mobile devices while on the move, not just at home.

Oliver Hansard, (Vice President Data Services, Liberty Global): The new wave of OTT players, such as Amazon, Netflix, and Google, have analytics as part of their DNA and are already using their customer data to drive value and improve customer experience. As a result, consumers increasingly expect that their data is used to deliver personalised experiences, raising the bar for pay-TV companies.

Alexander Sacher (CTO, HD Plus): The ability to offer OTT services as part of the product and services portfolio has become vital for pay-TV providers globally. Today, most traditional pay-TV providers have all the assets, skills, and capabilities required to provide OTT streaming services. However, the key question they have to answer is whether they will be able to compete against the major global internet players like Amazon, Google/YouTube, Apple, and Netflix in their region or territory.

What other kinds of opportunities are available for operators?

Jimmy Chen: For cable operators in Taiwan, high-speed broadband will continue to be an important

aspect of our future growth opportunities. Also, it is the foundation to support the launch of new services. Similarly to other pay-TV operators in the region, Taiwanese operators generally work with various new OTT service providers, such as Netflix and iQiyi among others, to offer value-added video services.

Oliver Hansard: There are multiple ways that viewing data from set-top boxes can add value to pay-TV businesses, including churn reduction; personalised pricing and packaging; cross-selling of products and services; and optimised content acquisition, scheduling and marketing. I am mostly interested in how pay-TV providers can generate revenue from advanced data and analytics externally, by delivering a value-added service to broadcasters and advertisers.

Mike Kerr: From a sports perspective, VR is a very interesting concept. Sports is perfectly suited, and created for VR, as sports fans are naturally predisposed to immersive and engaging experiences – anything that brings them closer to the live action. It’s a game changer in content production that could gain mass popularity very quickly.

”To succeed, pay-TV providers will have to deliver an integrated and seamless user experience across a variety of consumer devices” - Alexander Sacher

And finally, how do you expect the pay-TV market to evolve over the next five years?

Jimmy Chen: Similarly to other markets in the region, the pay-TV industry in Taiwan will have new challenges and growth opportunities ahead. For example, pay-TV providers in Taiwan may have to review the current basic tier channel line-up, which currently includes over 100 channels, as some consumers may prefer to subscribe to fewer channels. Looking further ahead, broadband services will likely become more important, having to support new Smart Home and other value-added services.

Mike Kerr: We’ll see a new wave of digital entrants and, in the near-term, there will be a scramble to reach the consumer directly, but I don’t think main stream consumers will be engaged to the extent that they will actively use multiple sources, maintaining 20-30 different passwords, accounts, and bills. They will want a simple aggregated proposition for a convenient viewing experience. I don’t think that the two-stage aggregation model of channel brands and distribution platforms is necessarily broken, but it will have to evolve.

I think that today’s traditional pay-TV operators, internet service providers and mobile operators are all well positioned to play that aggregator role in the future. Telcos, in particular, are in a very advantageous position, as they have been able to roll out their services to many more consumers. They offer integrated access, have direct relationships with the widest consumer base and they have strong financials and marketing platforms they can leverage.

Alexander Sacher: To succeed, pay-TV providers will have to deliver an integrated and seamless user experience across a variety of consumer devices, combined with rich content offering that encompasses traditional linear TV, on-demand content and YouTube-style short-form video clips. However, pay-TV operators will not be able to deliver this on their own and will have to embrace close partnerships with content providers.

While at first it may appear that pay-TV operators are facing a more competitive marketplace, with pressures from new entrants and pirates, it’s encouraging to see that 76% believe innovation to be a top priority and that launching new services will be critical drivers to growth.

By developing new innovations, accelerating business transformation and building strategic partnerships with content providers, operators can ensure they are fit-for-purpose into the future.

Simon Trudelle, Senior Director, Product Marketing, NAGRA