Technologies around us are dramatically evolving and incessantly being embedded into our daily lives. Today, one in every five people own a smartphone and one in every seventeen consumers use a  tablet device. This has a direct effect not just on our lives but on the market status as well. This growing market is accompanied by an explosive user adoption of OTT multiscreen services like Netflix, Hulu, LoveFilm, etc. In fact, Netflix recently announced that the service is now being used by more than 50 million subscribers across 40 countries.

But how are TV operators responding to this growing consumer appetite? Interestingly enough, despite the growing consumer demand for OTT multiscreen content, pay-TV operators often seem reluctant to offer such services in view of the tough challenges and hurdles they need to overcome in order to be able to offer these to their subscribers.

Pressing Issues for Pay-TV Operators

Let’s take a look at five strategic challenges that are creating waves in the pay-TV environment and affecting operators:

  1. Spiraling Costs. Operators pay a significant amount of money to acquire content, subsidize customers’ set-top boxes, and provide a support team that includes a call center and field technicians. So when they want to introduce a new feature or service, they have to rely on the TV middleware vendor to provide that service, and need to do so in the most cost-effective way possible. Making a huge investment in infrastructure equipment is not always a viable option.
  2.  Multiscreen support. Consumers nowadays have a plethora of devices to catch up on live events and programs, such as their iPhone, tablet, PC, and TV.  Hence, it is imperative for operators to be able to support multiscreen delivery. Unfortunately many operators do not have an appropriate platform that enables them to support new devices and device requirements without heavy hardware provisioning.
  3.  Outdated middleware implementations. No company wants to be placed at the mercy of another to be able to deliver its services. Middleware is what drives the entire viewing experience, including the user interface and any type of new service the operator wants to launch. The problem with most middleware implementations is that they are old, outdated, and heavy. Most importantly, they limit the operators’ ability to introduce advanced services such as targeted ads, apps, voice activation, gesture activation, content recommendations, multiscreen support, and socialization capabilities. For example, let’s assume an operator wants to begin offering real-time sports statistics in preparation for a major sporting event. This cannot be done by the operator with an archaic middleware solution. It would require action on the part of the middleware provider, which would cost a lot of money and take a long time to deploy, leaving the operator with very little control over their service offerings and future roadmap.
  4.  Expensive security infrastructure. Most of today’s TV operators are DVB providers and protect their content via smart-card based conditional access systems (CAS), which require frequent updates and are expensive to maintain, thereby limiting operators from introducing some new services. As operators look to roll out OTT services, transitioning their entire infrastructure from one that supports CAS to a digital rights management (DRM) solution is too costly. From a security perspective, these are some of the factors that currently limit operators’ ability to enter the OTT world and open up new revenue opportunities. As of today, the most cost-effective approach for DVB provider to launch OTT services is to build a separate infrastructure at the back-end that is integrated with their existing architecture, which again means maintaining two systems.
  5.  Keeping competitors at bay. Given how ubiquitous the Internet has become, streaming television services are cropping up everywhere. Pay-TV operators are in a stage where they need to strengthen their hold in the home in order to maintain its position. Many operators are turning to multi-tuner PVRs, thin clients, multi-rooms services, residential gateways, triple and quad-play support, in addition to enhancing their traditional STB service, as ways to try and improve upon their service offering.

What does it mean for the TV industry?

It is not all lost for the TV operators. The way operators choose to respond to the changes in consumer viewing habits and demands will impact their market position and affect their ability in generating additional revenue streams.

It is clearer now that today’s pay-TV operators have very little control and operational flexibility over their services. Set-top boxes (STBs) and customer premises equipment (CPE) come embedded with a certain set of features. Adding new features or changing existing ones is a time-consuming and expensive process. This makes it difficult for operators to expand beyond their basic service offering.

While any operator can provide a basic set of features, such as video-on-demand, a channel guide, etc., what differentiates one operator from the next is the level of innovation they bring to their service offering.  To deliver an enhanced viewing experience, operators need more control, as well as the ability to easily and cost-effectively add new features and services, so as to be able to keep viewers engaged with the television service and increase their revenue streams.

Step into the future of TV and overcome the challenges

An open, flexible middleware solution is a critical component of the pay-TV operators’ platform as it enables operators to support all of the basic functionalities of a TV service, such as zapping, channel recording, catch-up TV services, while also allowing them to launch new services and features with speed and ease.  With a fully open and expandable middleware solution, the operator can support a wide range of devices, such as STBs, smartphones, tablets, and Google Chromecast, to satiate the growing consumer demand for television anytime, anywhere, and on any device.

Migrating to a cloud-based TV platform that includes middleware for Android STBs, client-based apps for iOS and Android smartphones and tablets, and a backend server that supports personalization and socialization capabilities is an integral part of the equation and the best way for operators to get control over their services and begin enriching the television user experience for customers. This will allow operators to continuously add to the back-end platform in order to deploy new apps and services, such as voice-controlled EPGs, video conferencing, and more.

Finally, client-based apps are equally important because they enable an operator to provide a consistent television experience on every screen.  Operators need to find a client-based solution that will bring personalization, interactivity, and socialization to their service across all viewing devices.

Bottom line is really the age-old adage:  if you can’t beat them, join them. Despite the challenges and hurdles, Pay-TV operators better find a way to best utilize the growing market demands to their favor if they wish to benefit from these new revenue sources and opportunities.

Watch Joseph Deutsch, Comigo’s Vice President of Sales, talk to TV-Bay about how pay-TV operators can overcome the challenges and hurdles they are facing these days.

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