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, Holly Knill, Director of Now at Foxtel, shares her views on the evolution of the Australian TV market, changing consumer habits, and key innovation priorities for pay-TV providers to remain competitive.
What are the key trends and developments shaping the pay-TV industry in Australia?
Similarly to what is happening elsewhere in the world, OTT distribution has driven some significant changes in the Australian pay-TV industry over the last two years. However, it is important to understand the distinctive characteristics of the Australian market. Historically, broadband and mobile data have been less widely available and a lot more expensive than they are in the UK and the USA. As a result, OTT in general has been the poor cousin to television. Only now are consumers starting to get more flexible connectivity bundles, unmetered content packages and uncapped bandwidth. Hence, we’re now seeing growing demand and the range of available OTT services is expanding.
How are consumer habits changing with the emergence of new OTT services?
The 2016 Olympics were a game changer for OTT in Australia, driven by live TV consumption on mobile devices. Since then there has been a steady growth in consumption and OTT services have entered the mainstream. People are quite happy to stack a few video services together – you do see people creating their own bundles including services like Foxtel Now, Netflix, Stan and direct-to-consumer sports. Take-up of these services is driven by two factors: attractive content and competitive price. Consumers’ appetite for content is strong: Australia was one of the top countries for illegal content streaming (as shown by a research study done a couple of years ago). Optimistically, I am guessing that piracy has reduced recently given the range of legal OTT services, but it is still a concern. Overall, these trends are a sign that the traditional way of packaging pay-TV content won’t be future-proof, and service providers will have to change that.
What can pay-TV service providers do to remain competitive in this landscape?
First of all, they need to think about the content investment strategy. Pay-TV service providers in most markets are the biggest local spenders on content, but still struggle to get multi-platform content rights. They should not be buying content rights for individual platforms, instead they should pick the key content franchises and acquire all platform rights to them. With that, they would then be free to maximise all the relevant content windows across all platforms. There are also opportunities in content ownership, windowing and production, which could enable service providers to better exploit their production, programming and selling of content to other providers within their own market and internationally.
So what will a next-generation pay-TV product suite look like?
There is an opportunity to have multiple pay-TV products that target different customer segments, similar to what Sky in the UK has done with their product suite, which includes Sky Q, Sky Go, and Now TV. Now TV leverages Sky’s content spend, but is set up to run as a separate business, with a different proposition and different marketing focus. OTT should be core to any and all pay-TV providers so if you have not yet developed a compelling OTT service, then do it now. If you have one, then don’t position it as sub-standard to your DTH or cable products. And when I say OTT I do not mean on-demand content only – we should not forget that TV companies have live TV content, and live TV attracts big audiences.
What are the key priorities when developing next-generation user experiences?
As the range of products and devices used to watch video content grows, there are strong benefits in having a unified user interface that plays to the strengths of the different devices. That is one of the major areas we are devoting attention and resources to at the moment, with the goal of improving the usability of our products. The way you go about it depends on where you are in the lifecycle of your product and whether you are acquisition or retention focused. At the end of the day, it is about balancing the two priorities. Right now we are pivoting more towards customer retention. We want to delight our customers by driving engagement and removing friction points, while helping them experience the breadth of our content. Previously, when we were more acquisition-focused it was more about making the sign-up process easy and reducing the number of decisions a customer has to make at any point of the experience.
In terms of functionality that enhances the user experience, I think voice control will be huge. It is a household solution for many things, not only TV, and it will help consumers get more utility out of their pay-TV service. Improving the delivery of content should be perennial on any roadmap. There is always a better picture to be had in OTT and as an industry we haven’t nailed it yet, so if you’re not doing it already, then start experimenting with frame rates and codecs.
What do you think will be the defining characteristics of leading pay-TV service providers in 2023?
I am convinced that people will still be paying for pay-TV services, but consumers will not be locked into a single delivery method, such as cable or satellite. Leading providers will be multi-platform and still offering great content that includes amazing live sports, exclusive dramas and movies through an, optimistically, seamless user experience. Delivering the best content experience to as many screens and eyeballs as possible remains the priority.