The speed at which video streaming services develop, can create a disruptive influence on the traditional television landscape. According to research from TNS, technology advancements are producing more online viewing options for consumers and stiffer competition for pay-TV operators. On top of their daily challenges in this dynamic industry, pay-TV operators must deal with the multiscreen generation whose viewing habits lead them to watch more content on mobile devices than on their TV sets. Research shows, 72 percent of viewers use a tablet or smartphone at least once a week for video viewing, adding to the array of challenges for pay-TV operators trying to stay ahead of the game and adjusting to the new paradigm.
So how can Pay-TV operators thrive in today’s highly competitive and dynamic market after all?
Let’s take a look at the various ways pay-TV operators can keep on top of their game and protect their revenue streams while increasing customer satisfaction.
Content is King
Consumers these days tend to turn to the Internet for content, which makes it a big issue for pay-TV operators. Adobe reported that total TV viewing over the Internet grew by 388 percent in mid-2014, compared to a year earlier. There is no doubt that pay-TV operators need to work harder than before, and if they want to keep attracting viewers, they need to offer exclusive, high-quality content, tailored to viewers’ unique tastes.
By monitoring viewing patterns, operators can determine preferences and recommend customized content in order to retain their viewership. Offering themed content is also a way by which operators can increase their viewership by. Another strong strategy is to offer premium content including prime VOD titles, as early as possible, in order to attract viewers.
Better Pricing is Essential
It’s not just the source of content that becomes a struggle for operators, but also the pricing. According to SNL Kagan, the number of Americans who paid for TV through cable, satellite, or fiber services, decreased by more than a quarter of a million in the last year because consumers are turning to online streaming services that offer a variety of unique content for far less money than traditional pay-TV services. This is an obvious trend which has a strong effect on the competition for pay TV operators as well. In addition to offering exclusive content, the only way pay-TV operators can fight this trend and keep their subscribers coming in, is to offer competitive and flexible pricing models and packages. Verizon is a good example of this, with their recent announcement on the launch of a TV service next year with a la carte pricing model. The service allows customers to pay only for the channels they want to watch, making sure the content is attractive enough, and freeing them from bundles and long-term contracts.
Another innovative pricing model that pay-TV operators might want to consider is subscription video on demand (SVOD), which offers users unlimited access to a wide range of programs for a monthly flat rate. Futuresource Consulting reported consumer spending on video in the UK grew by 4 percent in 2013, with a further 3 percent growth expected in 2014, thanks to SVOD offerings.
Viewing devices, technologies, content, and business models are continuously being changed and created. Pay-TV operators need to adapt their strategies to the current market status to meet customer demand.
Personalized content and interactive TV capabilities have become must-have consumer demands nowadays, as more viewers look to get a best fit for their interest while being engaged with the content they are watching. To meet such needs, operators should excel and better enrich their service offerings beyond traditional content such as linear TV and VOD with a variety of apps such as real-time polls and trivia games, as well as TVE capabilities. Apps and TVE can enrich viewing possibilities, help provide flexible options, and adapt operators’ services to viewers’ interests and preferences.
Diversity of revenue
By splitting the revenue streams between subscriptions and advertisements, pay-TV operators can ensure profitability, even during down times. According to the Wall Street Journal, TV advertisers are pulling back and it has a dramatic impact on revenue. By focusing on subscription fees and targeted advertising, operators can ensure continuous profits throughout economic uncertainty. Operators should also explore non-traditional methods of revenue such as apps and in-app advertising. These innovative opportunities are a great way for operators to boost their revenue streams.
Having a first-class infrastructure is another key toward succeeding in the pay-TV market. Operators need an infrastructure that has the capacity to support a wide variety of services (e.g., live, VOD, catch-up, TVE). The infrastructure also needs to be flexible, enabling operators to quickly launch apps as well as support various types of connectivity and devices, etc.
** Adaptation is the only way forward: operators wanting to thrive in the ultra-competitive and ever-changing television environment must be flexible in their business model as a whole and have a finger on the pulse of the ever-changing industry. By offering attractive pricing, innovative apps, exclusive content, and by exploring alternate revenue opportunities, operators will be able to adjust to market needs and changed viewing habits in order to support their customers’ expectations and adapt their services for a wide range of devices.