The Pay-TV Innovation Forum is a global research programme for senior pay-TV and content executives, developed by NAGRA and MTM, and designed to catalyse growth and innovation across the global TV industry, at a time of tremendous change and disruption.
As part of the programme, we are publishing a series of interviews with leading TV industry executives from around the world to explore their views, perspectives and experiences of innovation. In this interview, Guillermo Paez, Director of Content Delivery Platforms at Telecom Argentina, shares his views on the evolution of the pay-TV market in Argentina, the impact of OTT services, the future of content packaging, and key priorities in developing the next-generation user experience.
What are the key trends and developments shaping the pay-TV market in Argentina?
In Argentina, as in other markets, the TV-on-demand model is beginning to prevail for all types of content other than live. Content takes centre stage, and becomes a differentiating element. Users are becoming increasingly demanding and sophisticated. In addition to quality, they also seek for freedom to decide what they want to watch and when they want to do it. Consumption becomes increasingly individualised. The family scene in the living room of the home around the television is a disappearing model. With multiple OTT services entering the market, the model for competition and complementarity between TV and OTT services has not yet found its equilibrium. There are a lot of diverse offerings in the market. This puts the onus on the customer to navigate a complex landscape and decide which content they want to use. We bet on a model where customers choose a centralised and aggregated offering. We, as a telco, are content aggregators. We can enable our customers to watch content whenever they want it in a user-friendly environment. As a result, we still have a significant opportunity to continue growing through new content partnerships.
In other markets the emergence of Netflix and other OTT services has impacted consumer expectations in relation to pricing, contractual flexibility, and content availability. What has been their impact in Argentina?
OTT services have had an impact across all of these areas. While it’s true that Netflix has a lower price than a standard pay-TV subscription, it does not own a network and infrastructure. Pay-TV platforms invest significant sums in infrastructure to support the exponential growth of broadband consumption. For example, at Telecom Argentina we are investing $5 billion in our network and infrastructure over the next three years.
Pay-TV platforms also have the leverage of sports, news and local content, but they definitely need to work hard to keep up with the competitive pace of the market. Additionally, the growth of OTT services has prompted the TV industry to become more competitive by introducing flexible packages to consumers. Some people think skinny bundles are a sensible next step for pay-TV providers – however, we think it’s still an open discussion. We don’t expect consumers wanting to have subscriptions to multiple standalone services in sports, news, and entertainment. They need a platform that can bring these pieces together at a reasonable price and deliver an exceptional user experience. In this scenario, as a telco, we are in a position of strength. In addition to pay-TV we also offer broadband and mobile services – we are already in the homes and pockets of our customers.
Where is Telecom Argentina today in terms of its pay-TV offering and where is it heading?
When it comes to pay-TV, everyone knows that the traditional pay-TV business is declining. To prepare for change, three years ago we launched Flow, our next-generation OTT and TV Everywhere platform. At that time, it was a unique service globally, because it offered the same user experience and content across multiple devices and innovative functionalities such as restart and backwards EPG, enabled by a network recorder capability. With Flow, we have an OTT platform – and can go standalone OTT, if we decide to. After making this leap, we now need to think about how we shape our content offering: whether we maintain the full offer or renegotiate with content owners to create skinny bundles. That’s still up for discussion. There could potentially be a comfortable middle-ground for pay-TV platforms to provide a mid-tier package, combining sports, news, and entertainment that consumers cannot access on new OTT services. We know that VOD content will be a key part of these new packages: 60-70% of Flow customers watch on-demand content, while the figure is only around 20-30% for our traditional HD TV service customers. That is why two years ago the company decided to start investing in co-productions of exclusive content that our customers can watch on demand.
What do you think are the key features and functionalities that a next-generation pay-TV service will have to support?
We’ve already made a leap in offering a multiplatform pay-TV service with anytime and anywhere availability, restart and backwards EPG functionality. There are some functionalities that could improve the value of the service – such as download-to-go – and we will continue monitoring our clients’ needs to be able to surprise them. Overall, it is all about becoming a true TV Everywhere service provider. The thing that will matter the most to customers will be content and how they find what they want to watch. We are putting a lot of effort into the discovery and recommendation engine. We are aware that users are overwhelmed with the volume of content. They spend too much time navigating the user interface and deciding what to watch. We don’t want that – it’s definitely a key aspect of our service that we need to get right.
What are the key technological priorities for pay-TV providers seeking to remain competitive over the next five years?
Moving to IP-based delivery is becoming standard across the industry. It is definitely important to keep up with new technical developments, such as multicast and low latency streaming, to ensure that you are as efficient as possible in delivering services over your network. However, the most important priority is to ensure that your service is as user-centric as possible. That is the motto of our new company and it underpins how we think about technology. The idea sounds simple in principle, but it’s not that easy. We’re working hard to transform the company and put the user at the centre. Launching Flow was our first step in doing that, which resulted in many changes in the business.