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Friday, July 14, 2017

Ingmar Schmidt, Business Operations and Proposition Manager at Swisscom TV talks about the recent developments in their innovative pay-TV proposition

The Pay-TV Innovation Forum is a new global research programme for senior pay-TV executives, developed by NAGRA and designed to explore and catalyse innovation across the pay-TV industry, at a time of unprecedented change.

As part of the programme, we are publishing a series of interviews with leading pay-TV industry executives from around the world to explore their views, perspectives and experiences of innovation in the pay-TV industry.

Last year Pay-TV Innovation Forum identified key factors underpinning the most advanced and diversified pay-TV portfolios, concluding that scale was one of the key enablers of innovation. Our findings suggest that the most innovative pay-TV providers tend to be major enterprises with large subscriber bases that have access to funding and substantial in-house technology resources, often working closely in strategic partnerships with technology suppliers. However, we also found certain exceptions to this rule, particularly among smaller-scale telcos, such as Swisscom, which are able to leverage their telco footprints and employ agile development techniques to deliver innovative pay-TV and related services to their customers.

In this interview, Ingmar Schmidt, Business Operations and Proposition Manager at Swisscom TV talks about the recent developments in their innovative pay-TV proposition and key factors that enabled Swisscom to deliver new product features rapidly in a highly competitive Swiss pay-TV market.

Where is Swisscom today in terms of its pay-TV offering and where is it heading?

Swisscom has been offering TV services for more than 10 years now and was the first major IPTV provider to enter the Swiss TV market. Today we have a state of the art IPTV proposition, shaped to cater to the specific wishes and needs of Swiss customers. Looking at other pay-TV providers in Europe, their next milestones are to ensure that all of their content is available on all devices and to introduce new features, such as voice search or Ultra HD and HDR. Swisscom has reached these milestones: we’ve introduced full device convergence – ensuring that all content is available on all devices - two years ago and have built a solid base of Ultra HD customers, having introduced our Ultra HD set-top box a year ago. Our focus now is the content proposition: how can we deliver current and new content that improves the overall perceived value of our offering? We’re also looking into other related areas such as Internet of Things and how that could be integrated into our portfolio. In addition to that, we are also looking at opportunities in advanced advertising.

What were the key factors that enabled Swisscom to achieve these innovation milestones earlier than most other pay-TV providers?

It was absolutely essential for us to get our development cycles right. Previously, it would take us about 1.5 years to bring new product features into the market, which was too long. After we migrated to a technology platform developed in-house and adopted agile development approaches, we managed to reduce the development cycle to as low as 3 months. This has given us a competitive edge. In addition, it has provided us with a certain level of flexibility to test and add or remove new features, staying sensitive to our customer needs and business implications. We are very customer- and data-driven in our development work and do product iterations working closely with our partners.

Do you think set-top boxes are important in delivering pay-TV services or are they becoming unnecessary?

It really depends on the type of pay-TV provider that we’re talking about. Set-top boxes might be an obstacle in ensuring your service reaches as many customers as possible, with USB sticks or Smart TV apps presenting a feasible alternative of delivering pay-TV services. Developing integrations with multiple platforms is costly and might be uneconomic to a single-country operator. However, if a pay-TV provider is as experience- and performance-focused as we are, a higher degree of ownership of the streaming device and the delivery on its platform help to achieve a high level of quality. As a result, we see set-top boxes as essential to our core service. However, for a large-scale multi-territory provider it might make sense to develop additional solutions and integrations. For such players launching a USB stick to deliver their pay-TV service could be a great way to reach customers who want to pay less or do not want to have a set-top box. Some pay-TV providers are also looking into the virtualised set-top box approach, but have to find ways to deal with the resulting scalability, experience and performance drawbacks.

With new OTT providers entering the market, some pay-TV providers have started reporting subscriber losses and some have launched their own standalone OTT services in response. What has been your experience?

We’ve seen a wave of major OTT aggregators, such as Netflix entering the Swiss market, with others expected to launch as well, and a number of smaller OTT providers already providing access to linear TV. There is a small proportion of the population that is looking to optimise their service subscriptions by unbundling, but the absolute majority still prefers multi-play bundles due to convenience. In addition, we position ourselves as an aggregator. We have on-boarded Netflix onto our platform and are looking for additional content that would enrich our offering. Growing one’s customer base and making own content available to new audiences by going OTT is also a valuable option, even when executed only with a limited content portfolio. However, there cannot be any compromises when it comes to the quality of service.

When it comes to innovation, scale is one of the key enablers of it, but how do you manage to stay innovative as a small-scale provider?

First of all, it relates back to our technology platform that I mentioned previously. As we own the whole platform from back-end to front-end, we can change and adapt almost every layer of it. However, the technology platform is only an enabler of innovation, but does not guarantee it. We need to make sure that we’re developing innovations that truly differentiate our offering. We want to be ahead of the market for at least one year in terms of new features. Our customers have developed very high expectations for the quality of our services, expecting us to introduce new features every 3-6 months. Secondly, the Swiss pay-TV market is unique in terms of regulation. This has given us the opportunity to introduce innovative functions, which are really valued by our customers. Finally, we try to engage at early stages with the start-up community, following innovative and disruptive ideas that are coming out of it. Our voice recognition solution that works with several Swiss-German dialects is a great example of this type of work.