Kudelski’s Nagra co-developed the pay TV Innovation Forum 2017 global research program with international research and strategy consultancy.
Legacy European pay TV operators have been spared the sharp cord cutting of the US market but will face many of the same challenges as they enter a transitional phase. The main drivers of change are widespread availability of cheaper or free OTT services and growing non-linear consumption.
This is the principle finding of research on the European market conducted as part of an ongoing six-month program by the pay TV Innovation Forum 2017 developed by content protection and TV solutions specialist Nagra in partnership with MTM, an international research and strategy consultancy.
To meet these challenges and avoid cord cutting escalating as it has in the US, European operators need to develop new products rather than just enhancing existing services. The research program concedes that pay TV providers rights across the EMEA region have innovated and improved their product and service portfolios significantly over the last year. OTT services and non-linear consumption have already transformed the European pay TV landscape.
But operators need to raise their game further by responding to changing consumer behaviors and rising expectations by accelerating their investment in the user experience. They need to introduce Ultra HD if they have not already done so, as well as third party apps that enrich the experience. Currently 25 per cent of providers offer some flavor of UHD, while 53 offer apps, up from 8 per cent and 46 per cent respectively from a year ago. Meanwhile standalone OTT services, another essential ingredient for success, are now offered by 36 per cent against 31 per cent a year ago. These figures are too low given the rapid advance of dedicated OTT service providers.
Such providers are often described as more agile, innovative and up to “web speed”, which may be clichés but do reflect ability to bring out new features and even complete services more quickly. Operators need to be faster at bringing out new services that will underpin future growth, such as skinny bundles, personalized packages and seamless multiscreen experiences, rather than hoping to maintain revenues by just pumping up prices of traditional packages. The research highlighted three innovation priorities for European pay TV to remain competitive and grow further. These are next-generation content discovery, advanced advertising and seamless multiscreen services.
These three have considerable overlap. For example addressable advertising and dynamic ad insertion, which will be crucial for revenue growth, will be enhanced by the ability to discover compelling content within a coherent multiscreen package without barriers. Indeed despite the fact that over 90 per cent of pay TV operators in EMEA have rolled out TV Everywhere services, the research identified significant scope to improve the experience by making it an integral part of the main pay TV offering.
On the content discovery front, pay TV providers need to make better use of prediction and recommendation techniques that consumers find convenient and acceptable. There is also scope for aggregating OTT services into central gateways to all content that consumers have access to.
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