The emergence of over-the-top (OTT) TV streaming services has been a sobering experience for pay-TV operators worldwide, as they saw their comfortable ownership over video delivery to our homes ebb away.
The last few years has been a transformative time of entertainment disaggregation. Every content owner desperately wanted to be an app. Brands, media companies and broadcasters all aspired to having a direct connection with the user uncluttered by the cable, satellite or telco TV provider, that ever-present intermediary with whom the content owner was obligated to share the spoils.
Disaggregation also happened because in the traditional fat pay-TV bundle, there is almost by definition a limited amount of content relevant to any individual subscriber. Inevitably, he or she was paying for lots of content of no personal interest. Subscribers began to believe they could find more real value for their money elsewhere.
Another contributing factor to disaggregation, if we’re being honest, was because pay-TV providers, in the minds of many of their customers, inched up their prices often without any accompanying perceived enhancement to services. Clunky, out-of-date on-screen experiences started to become unpalatable to users now accustomed to slick discovery and viewing on their tablets, smartphones and connected TVs.
Following years of what the media called the Streaming Wars, it is evident however that there’s been no “winner takes all”. Cord-cutting is still happening at pace. There is general agreement that the proportion of homes with pay-TV – in the traditional sense – looks likely to continue to decline.
But all is not lost for pay-TV.
The streaming experience, after years of service proliferation, is far from perfect. Deciding which services to buy can be a big research exercise. Having to perform multiple searches for content, browsing through each and every streaming service you pay for, all with different interfaces – some quite good, some very, very bad – hunting everywhere for the next show to watch, has started to become tiresome. And paying three, four, five or more separate monthly fees just for digital entertainment is downright inconvenient. Streaming subscription fatigue is a thing.
Welcome to the era of TV reaggregation
What is the established pay-TV operator to do now? It needs to evolve. Cable and satellite providers, as well as telcos, continue to have the huge advantage of being a key gateway into the home, and with long-standing customer relationships.
Traditional providers have an opportunity at hand, and it’s their choice whether to seize it or pretend these seismic changes aren’t happening.
Incumbents now have the chance to learn lessons from the streaming wars and act on that knowledge – to embrace the rich offerings of OTT and weave them into larger, ‘super-aggregated’ pay-TV offerings.
Faced with a kind of stalemate, the aftermath of the streaming wars, operators have begun to closely study what the OTT services do well, and to adapt. Pay-TV providers are finally studying the modus operandi of those who disrupted their dominance. As the old saying goes: If you can’t beat ‘em, join ‘em. Fortunately for viewers around the world, this TV ‘rapprochement’ has begun in earnest.
Achieving the super-aggregation nirvana
Pay-TV operators today are introducing Netflix and other streaming players into their bundles as a priority. But simply having an extra button on a remote control is not enough to deliver a great ‘super-aggregated’ service to subscribers. People appreciate curation. We like it when a curator considers thousands of artworks to lovingly assemble a selection into a themed exhibition at our favourite museum. We like it when a close friend tells us about a TV programme they think we’d like. Technology is now enabling the pay-TV provider to be that friend.
Vodafone Spain recently saw a sizeable, rapid gain in new TV subscribers, reporting in November 2020 a total of 1.5 million at end-September, including a Q2 2020 hike of 114,000 new subs. The company experienced this steep rise in subscribers because it set itself a clear goal to become the number one destination for scripted content in the country. The company aggregated scripted series originating from multiple sources, including HBO, to create a dedicated bundle at a price only marginally higher than that of just one standalone streaming service. But importantly, it also acts as curator, offering recommendations for viewers. This example illustrates the power of super-aggregation to attract and engage.
So why isn’t every TV viewer living the curated super-aggregated dream? What is standing in the way?
The major explanation is that to become one represents a big commitment to the consumer that is based on the principles: 1, always have the most popular and relevant traditional and OTT content on your service. 2, provide the best-possible user experience for discovering and watching this content. And 3, have the best bundle that leverages the new era of broadcast and OTT content options.
Achieving all this takes a lot of thought, planning, partnering with a range of specialists and, of course, commitment backed up by investment. Delivering on this commitment to end-users requires both a solid business strategy and a flexible technology platform to execute it.
Telcos are in the perfect position to become super-aggregators. They have the advantage of pricing latitude thanks to the other profitable mobile and data services they offer. And they have ample broadband piped directly to the home to play with. So why haven’t more telcos, and cable TV companies for that matter, done it?
Many have ageing infrastructure that’s simply not up to the job. To offer a quality super-aggregated experience, providers need to be agile and able to integrate without delay new services as they enter the marketplace. Integration of metadata, and updating of billing, user interface and other key system elements also need to be nimble and well executed to survive in today’s competitive landscape.
For smaller, less well resourced telcos, achieving all these objectives poses even bigger obstacles. The challenges are not only technical; getting attractive commercial agreements with content owners might be tougher.
Technology can level the playing field for all these incumbents.
The answer lies in a change in mindset, and adoption of new technology. Solutions which unlock access to metadata are now available, as are technologies which help deliver user-friendly, seamless recommendation and discovery across a super-aggregated offering. Advanced analytics can help operators learn what viewers are doing, and what they really like.
Netflix has set a new standard for what consumers expect. Binge-watching – indeed a word which previously didn’t exist – has never been easier. Multiscreen options to continue watching shows, smart searching and recommendations, personalised profiles – this is all the new standard for TV and consumers love it. Happily, pay-TV has begun to learn and adapt.
Super-aggregation is a win-win-win for content owners, pay-TV providers and telcos, and for the consumer. Telcos need attractive OTT content to stay relevant and to sell their quad-play offerings. The OTT players themselves need reach, particularly the lower-cost distribution which telcos can give them by offering their content as part of a bundle. For consumers this means always having the content they want and the convenience of all of it being in on place.
While the era of disaggregation saw the emergence of dominant players such as Netflix, Amazon Prime Video and Disney Plus, none of them will wrap up the entire TV distribution market in the next few years. From the larger perspective we’re still, fortunately, living in a world of media diversity with global companies and platforms on one hand and local pay-TV, broadcasters and content providers on the other. They all will keep co-existing. The whole industry, especially the creatives, are beneficiaries, as are we all as consumers.
There still over a billion pay-TV homes in the world. The pay-TV game is far from over. The moral of the streaming wars for pay-TV operators? Turn your enemies into friends, embrace them and learn from them. The result is a unified super-aggregated pay-TV proposition with truly mass appeal. Today it has become abundantly clear that the work involved in enhancing pay-TV with the best in streaming, to ultimately becoming a super-aggregator, is very much worth the effort.