Sponsored By

Why the Rise of SVOD Could Boost Pay-TVWhy the Rise of SVOD Could Boost Pay-TV

Service providers have a great chance to take advantage of the OTT video phenomenon by melding streaming video services into their pay-TV packages and offering greater choice, convenience and navigation to consumers.

Ivan Verbesselt

December 23, 2019

4 Min Read
Why the Rise of SVOD Could Boost Pay-TV

With more choice at their fingertips than ever before, consumers today want value for money in their pay-TV packages: a mix of appealing content and convenience at the right price.

And there's only more choice on the way; major direct-to-consumer (DTC) services have just come or will come to market soon from the likes of Disney (Disney+), WarnerMedia (HBO Max), Apple (Apple+), NBCUniversal (Peacock), Discovery and most likely Viacom/CBS -- not to mention what Amazon is already doing.

With this huge increase in streaming video content, there are new needs to address: helping viewers find what they want to watch and developing content packages to target multiple, specific consumer micro-segments at scale.

This is a more complex challenge than just putting every available channel in a bundle or targeting niche viewers with expensive channel add-on packages. Providing access to a broad catalog while making sure the available content efficiently finds its audience and entices viewers to come back for more is the core value (and challenge) of OTT distribution.

But the multiplication of such services is, in fact, creating an opportunity for service re-aggregation on a broad scale. And for pay-TV providers in particular, the proliferation of new DTC services is a potential threat that can be turned into a promising opportunity.

By onboarding and smartly aggregating these new services along with the apps that embody them, pay-TV providers can offer instant customer reach to newcomers that need to gain scale fast to sustain their content spending and compete effectively with the likes of Netflix.

Service providers with pay-TV expertise have a great card to play; they already aggregate studio content and thematic channels. They can also leverage trust and a billing relationship with customers. That said, they need to act fast to take advantage of the value of their installed subscriber base.

They must invest in their user experience, starting with backend platforms to manage services and improve monetization, while leveraging the power of AI, data and analytics to make the transition from a broadcast, channel-centric world to an OTT-centric playing field. Pay-TV providers that move too slowly may see their positions exposed, losing access to new generations of customers.

Differentiation is also key. There is a value-add that pay-TV must offer in order to stand out from the increasing crowd of DTC services. Through their existing 4K broadcast infrastructure and, in particular, their acquisition of sports rights, they still have access to a large selection of exclusive live content at the regional level -- something that SVOD players will ultimately struggle to obtain or may never get to.

And to be successful, aggregated content must also be delivered across all video screens with broadcast-like scalability and reliability, not to mention low latency, still a defining success factor for live sports. If the re-aggregation of content leads to an offering that is too limited, or the multiscreen experience is insufficient, or packaging or pricing is not flexible enough to attract new consumer segments (mainly younger viewers), then DTC players may get the upper hand and own the consumer relationship, extending their content offering over time. Subsequently, these recent entrants could become the new video aggregators, pushing incumbents back to be solely network and bandwidth providers over time.

Hypothetical situations aside, pay-TV providers looking to onboard and aggregate SVOD have three key challenges to consider:

  • The first is to deliver a true aggregated experience, enabling customers to easily find, quickly access and seamlessly consume all the best content available across all screens.

  • The second is to provide the depth and relevance of content that address the needs of the target audience, preferably achieved through a lightweight onboarding of DTC SVOD services, aggregated search and deep-linking into content. The latter will entail quite a bit of shrewd negotiation, and the degree to which deep-linking can be achieved will greatly vary between the different onboarded D2C properties.

  • The third and final challenge is data; providers must leverage all the usage and network data collected to deliver a better service, while enabling content partners (under specific business terms) to also create more compelling content through a better understanding of the audience.

Service providers that move fast, make the right technology investments and adapt quickly to the new market environment have a head start in terms of revenue and technology investment budget -- thanks to their subscriber base and often high ARPU positions. But with new platform investments taking time to materialize in several markets, the clock is ticking -- the phrase "time is money" has never been more prevalent in the converged TV and video industry.

But if content aggregation is done right, core pay-TV content combined with multiple DTC SVOD content sources will give pay-TV providers a potential high-value, multi-genre content catalog that can be packaged in multiple ways to satisfy all consumer segments.

— Ivan Verbesselt, Senior Vice President, Marketing, NAGRA

About the Author(s)

Ivan Verbesselt

Senior Vice President Marketing, NAGRA

Ivan Verbesselt is Senior Vice President Group Marketing with NAGRA.

Previously, Ivan was Vice President in charge of Alcatel's TV business after having led the Product Marketing and CTO office of Alcatel's DSL business.

Ivan started his career in telecommunications in 1990 with Alcatel's Corporate Research department where he enjoyed contributing to the design of several products in the broadband access space. Ivan has also held various positions in product management for broadband access products and services, both within Alcatel and Belgacom, and was Principal of Quadratio Consulting Ltd focusing on Broadband TV.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like