Pay-TV competition to intensify as innovation remains vital

NAGRA's 2018 Pay-TV Innovation Forum identifies six key innovation areas in the industry
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84 per cent of pay-TV executives expect competition for paid-for video services to increase dramatically over the next five years.

This is according to the latest global findings of the 2018 Pay-TV Innovation Forum, published by NAGRA in partnership with research and strategy consultancy MTM.

The programme – now in its third year – found that while participants are optimistic they can continue to appeal to paying consumers, an increasing number – 90 per cent of executives – believe that pay-TV providers will have to innovate strongly to remain competitive and relevant, up from 85 per cent in 2017.

The research highlights how the pay-TV industry is converging towards a platform-agnostic model, and as a result is transitioning into a paid-for-video market, spanning a variety of offerings including standalone OTT and direct-to-consumer services. This shift is another reason why 77 per cent of pay-TV executives consider innovation to be one of the top three strategic priorities for the industry.

Content piracy remains a concern, with executives agreeing that the industry is experiencing a significant threat to the long term sustainability of pay-TV and OTT businesses. 47 per cent of 2018 respondents believe that piracy will lead to greater pressures on the industry over the next five years, in line with 2017 findings.

The 2018 research focuses on six key innovation areas in the industry:

- Continued investment in next-generation pay-TV services: Most pay-TV providers (65 per cent) have improved their portfolios in the last 12 months, primarily focusing on the core pay-TV proposition as they deploy next-generation set-top boxes that support advanced functionalities such as third-party apps, personalised content recommendations, and 4K.

- More diverse multiscreen pay-TV propositions: 77 per cent of executives surveyed believe that pay-TV bundles will evolve substantially over the next five years, catering to the needs of different customer groups, and 89 per cent agree that delivering a seamless and personal consumer experience will be key.

- The next wave of aggregation – super aggregators: This model, where companies offer a range of content and services via a single subscription, is seen as a way of simplifying a fragmented marketplace for consumers, while also offering additional growth opportunities for well-established operators.

- Converging pay-TV / OTT offerings: Most traditional pay-TV providers are now looking to offer converged pay-TV/OTT services. As a result, the pay-TV market is transitioning into a paid-for-video market.

- Moving beyond the set-top box: Many industry executives believe that network infrastructure and billing relationships – rather than proprietary set-top boxes – are now the gateway to the customer.

- Growing focus on diversification, particularly connectivity: Fixed and mobile broadband services are expected to grow in importance in future as providers pursue bundling strategies to deliver better value and improve stickiness.

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