The European findings of the 2019 Pay-TV Innovation Forum, a global research programme designed to explore the biggest challenges and opportunities facing the pay-TV and content industries, produced by content protection and multiscreen television solutions provider NAGRA in partnership with research and strategy consultancy MTM, highlights that pay-TV executives are becoming more optimistic about responding to OTT disruption.
In a specially-convened seminar held in London, senior pay-TV and content provider executives expressed their optimism about the future of the pay-TV industry in Europe and identified five key priorities for the industry in the coming years:
Executives believe their existing aggregation models must evolve in response to the rising popularity of OTT services, and an anticipated decline in the number of linear channels. 94 per cent of participants believe that, by 2024, major platforms in European markets will carry 20 per cent fewer linear pay-TV channels than today: the changing dynamics of the wider industry – including the shift from linear to on-demand viewing – means that some smaller channels will become unsustainable.
79 per cent of executives polled believe that major OTT subscription services, such as Netflix and Amazon Prime Video, can be valuable as part of the pay-TV offer. On-boarding OTT services can deliver both convenience and utility, as well as creating new marketing and bundling opportunities. Most executives are optimistic about the longer-term benefits of integrating OTT services into their pay-TV offer: only 26 per cent believe that the growth of paid OTT services will have a negative impact on the European pay-TV industry over the next five years.
More than ever, executives agree that pay-TV operators need to transform their business in order to create and deliver the full range of digital products and services that viewers demand. However, challenges remain – over half (57 per cent) believe that costly legacy platforms represent a major operational challenge to pay-TV businesses as they look to transform. Deciding when, where and how to change also remains a key challenge, as does identifying suitable partners to provide support and expertise.
The European pay-TV industry has made good progress in developing data and analytics capabilities, to support more complex businesses and to better serve their customers but many industry participants believe that there is more to do. Good analytics, coupled with automation and machine learning capabilities, have the potential to transform decision-making, improve performance and deliver far better customer service. However, legacy TV platforms and poor infrastructure remain a challenge, limiting the availability of high-quality data. Moreover, data is unevenly available across the market. Many content providers argue that the historic reluctance of pay-TV operators to share viewer data is outdated and needs to be re-thought, to facilitate the provision of better services and to support competition with the major international OTT providers.
Executives still see piracy as a major challenge to the pay-TV business and anticipate only a modest decline over the next few years. Just 7 per cent believe that the proportion of European consumers illegally accessing content will have halved by 2024. New forms of content piracy – such as the rebroadcasting of live streams on social media platforms – are a concern, impacting churn and revenue. Participants indicated that content owners are increasingly engaged in combatting it with a combination of technology and cross-industry initiatives.
“These latest findings shed new light on the key priorities and trends affecting service providers in Europe and are the first of a range of findings to result from the 2019 Pay-TV Innovation Forum research programme,” said Simon Trudelle, Senior Director, Product Marketing, NAGRA. “The growth of OTT services is undoubtedly having an impact on the pay-TV and content industries and digital transformation is emerging as a key priority. It is exciting to see that while challenges exist, focus is on creating opportunities for growth and in the end, delivering services that will delight consumers and keep them engaged. The next few years will prove to be pivotal in this regard.”
“Europe’s pay-TV industry is at a crossroads, with slowing growth in many markets and increasing competition on the horizon,” added Jon Watts, Managing Partner, MTM. “After nearly two decades of growth, we’re starting to see the signs of a very different industry – with a greater focus on the network, a broader offering of products and services, and new approaches to aggregation and content retailing. It’s encouraging to see signs of optimism and widespread interest in these new approaches, as the industry looks for the next wave of growth opportunities that will see it into the 2020s.”