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, Jacques von Benecke, CTO for OSN, shares his views on the challenges faced by pay-TV operators and OTT services across the Middle East and North Africa and the opportunities offered by digital transformation.
What are the unique characteristics and challenges for pay-TV operators the Middle East and North Africa (MENA)?
Talking about MENA as a single entity is unhelpful considering how diverse the countries within the region are. A range of languages are spoken, even within individual countries. Our content must be available in English, French, multiple dialects of Arabic and Turkish – and even subtitling presents challenges given that Arabic is written right to left. In addition, the countries we broadcast to are very diverse in economic terms: many have experienced extensive conflict and are very poor. Customers in Saudi Arabia are typically what we call Band A customers, paying $150 per month for a premium platform. Band C customers, in Iraq for example, pay significantly less for nearly the same service.
The region has many other unique features. Internet penetration is low due to the vast amounts of desert, so OTT is challenging, with even the largest OTT players struggling to reach 1 million. The conditions for pay-TV are also challenging: most TV viewing is free-to-air (FTA), the payment infrastructure is unsatisfactory, and many countries have cash cultures. Even in Dubai the concept of direct debit payments is seen as foreign.
In some markets, partnerships with telcos can be a positive opportunity for OTT services to gain distribution, in MENA the telcos are owned by extremely powerful regional families and are not always subject to market pressures that would encourage them to offer us a competitive deal. In addition, OTT will not take off in the region until data prices are lowered: at the moment viewers are paying twice - for content and for data.
What measures can pay-TV operators take to combat the threat of piracy?
Piracy is ubiquitous and you have to prepare for it. We work with NAGRA to fingerprint and watermark our content so we can find illegal usage easily. We recently won an award from BroadcastPro ME for the innovative Platform Security Information System (PSIS) we have built on Amazon Web Services’ (AWS) cloud platform. Cloud allows us to develop and scale anti-piracy applications fast, automating much of the process.
We also spend significant resources lobbying governments to take action against piracy. The biggest threat to the regional TV industry is piracy. For example, the Qatari OTT service, beIN, has stopped offering certain channels because it is not worth paying to distribute sports rights if their content ends up on pirated boxes for $30 per year.
We need to think about piracy in a different way. Most people will pay for premium content if they get value for money, but as an industry we have lost sight of what viewers are willing to pay. If we stop overcharging, we will reduce the risk of content theft.
What digital transformation projects is OSN undertaking and what challenges do you face?
We are moving to the cloud and working to introduce better data processes across the company. By better integrating our back-office processes, such as subscriber management and payment processing, cloud will help speed up our ability to innovate. This year we have been experimenting with automation, for example, using machine learning (ML) to pre-scan content for compliance editing. On the content production side, by the end of 2020, we want to be disconnected from the broadcast centre in Dubai so we can do remote editing in the cloud and publish via our own CDN.
ML is also useful for our financial forecasting and payment structures. We have developed a churn prediction model which is helping to reduce cancelled subscriptions month-on-month for the last 3 quarters. Another application is identifying when to schedule digital payments. Salaries aren’t paid on a specific day of the month here; we now use ML to identify for each customer which day has the lowest chance of failing, and to experiment with different fee methods, like charging a percentage of the fee each week.
Overall, company culture is the biggest factor holding back our digital transformation. We need to work to make the company more comfortable with constant fast-paced change – and excited about the opportunities that brings.