In an era of cord cutting and cord shaving, what’s the state of the traditional pay TV market in North America? How can pay TV operators respond to shifting subscriber demands and expectations? Those are tricky questions, obviously, but Nagra and MTM are taking them on in the first wave of findings from the Pay-TV Innovation Forum 2017.
North American pay TV service providers were polled by the companies in April 2017 and asked about evolving consumer expectations and habits, along with a significant increase in on-demand content consumption, pricing pressures driven by OTT offerings, and access to pirated streaming services. According to a statement put out by the Nagra and MTM, some experts are predicting a possible risk of significant revenue loss if the status quo is maintained.
To attract younger audiences, pay TV operators surveyed said they are focusing efforts on significantly strengthening OTT and multiscreen propositions. They said younger audiences expect to consume on-demand content on mobile screens vs. the traditional linear TV environment and bundles preferred by older generations. As a result, operators are rethinking pricing and business model approaches to better address all demographics and market segments, according to the survey. It also concludes that cloud-based technologies also can help service providers compete more effectively with internet-based rivals.
More than half of industry executives polled reportedly cited advanced data and analytics as an area that will have a significant impact on the North American pay TV industry over the next five years. Additionally, the growing threat of content piracy in the North American pay TV market was pointed out as an issue of concern. Key challenges include the emergence of illegal retail IPTV set-top boxes and apps, the growing costs of pay TV subscriptions, and the increased sophistication of pirates. However, new more holistic anti-piracy solutions and increased industry awareness, along with smarter legitimate on-demand TV services, are expected to reduce the impact of piracy in the long term.
“North American executives clearly recognize that the industry is experiencing a period of change and disruption – and are making the investments required to remain competitive in a challenging market,” Jon Watts, managing Partner at MTM comments. “This year’s research program shows that the North American industry is moving forward, developing and extending product and service portfolios and addressing new opportunities. In areas like OTT, data and analytics and IoT, the region is leading the way.”
Watts underlined that significant competitive challenges lie ahead, but he thinks the pay TV industry is on track to deliver improved value propositions to consumers, which Simon Trudelle, senior director, product marketing at Nagra, agreed was the case.
“North American pay TV operators have started to deliver improved value propositions to consumers that address the disruptive actions of the digital giants,” Trudelle says. “Service providers who are planning to develop and deliver better user experiences, new OTT services, leverage cloud and data analytics, while contributing to curbing the impact of piracy on the ecosystem will be able to maintain a leadership position with solid margins. Yet the intensity and pace of change in the industry calls for a new era of innovation-driven partnerships with content owners as well as technology vendors.”
More information on the North American research can be found here.
