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Research: US world largest pay-TV market

Accounting for just under half of $200 billion in global pay-TV revenues, the US is the largest such market in the world, according to a research report – The Pay-TV Innovation Landscape in North America – produced by specialist provider of content protection and multiscreen television solutions NAGRA and international research and strategy consultancy MTM.

This is the third white paper in a series from the Pay-TV Innovation Forum, a global research programme exploring the innovations and strategies that will drive the next phase of growth for pay-TV operators.

These latest findings outline the current state of innovation and the challenges and opportunities of the highly developed North American pay-TV industry. The US pay-TV industry is the largest in the world, accounting for just under half of $200 billion in global pay-TV revenues. The region is also one of the most advanced with all major service providers offering IP-connected set-top-boxes and 70 per cent enabling access to third-party OTT services.

North American service providers are leading the way in introducing next-generation features, including 4K (offered by 25 per cent), content recommendations (35 per cent), and voice control (10 per cent). Diversification into adjacent business areas is another big factor emphasising the region’s global leadership, with 50 per cent of service providers offering home security and automation bundles to customers, mainly leveraging their own broadband infrastructure.

But this advanced market maturity comes with new challenges that require a redoubled emphasis on innovation to adapt to intensifying competition for content and evolving consumer preferences and behaviours. Service providers are adapting to a new on-demand and multi-screen environment, where the line between the core pay-TV offer and paid OTT TV proposition is blurring, while the need to generate new forms of revenues increases. In this context, app-based OTT pay-TV services and Smart Home solutions were stated as the top-two opportunities to drive growth over the next five years.  Providers also taking steps to expand their content offerings, including through adding standalone OTT service and new forms of content, and further monetise their services through advanced advertising and data services – an area that has already seen strong growth with 35 percent of providers in the marketplace offering these solutions.

The report also delivers executive insights on the critical factors that will drive future success and the key hurdles that pay-TV providers must navigate in order to retain a future-proof trajectory, including balancing investment in innovation and their core business;  shifting business models away from one-size-fits all pay-TV subscriptions to more nimble offerings while maintaining revenues; and clearing the path to pay-TV and OTT co-existence to provide a personalised, high quality and seamless user experience across multiple content services and screens.

“It’s great to see that in a time of unprecedented changes in consumer behaviour the North American pay-TV market is consolidating its strength, while also targeting new key areas for further growth,” said Simon Trudelle, Senior Product Marketing Director for NAGRA. “However, service providers mustn’t rest on their laurels. As TV-product competition from new entrants intensifies, pay-TV service providers will have to accelerate innovation and time-to-market to create more value for their customers, with partnerships with vendors and multi-company collaborations set to become increasingly important.”

“The research into the North American pay-TV industry has not only underlined its place as the global leader in innovation, but also its determination to maintain its leadership by actively continuing to innovate and pursuing new opportunities,” said Jon Watts, Managing Partner at MTM. “It has also brought to light key issues, such as adapting more proactively to new technology and market conditions, which, once addressed, could potentially unlock significant value and help drive the next wave of innovation in the industry.”

The paper provides in depth analysis of the product and service portfolios of 20 leading pay-TV providers in the USA and Canada, accounting for around 115 million pay-TV households. A Latin American edition will be available in the next few weeks in addition to the already published Asia Pacific and European editions. Final conclusions will be presented at the 2016 IBC Conference.

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