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, Mario de Oliveira Madeira, CTO for Nuevo Siglo shares his views on how pay-TV businesses can evolve to meet the competitive challenges posed by OTT services.
What trends are shaping the pay-TV market in Latin America?
Uruguay is different to many countries in South America because it has high internet connectivity. All of the cities have fibre broadband, so we are well suited to OTT. Uruguayan pay-TV operators face unique challenges, as cable TV companies are not allowed to offer broadband internet services, so we are not able to expand our product offering in this way.
Do you consider OTT services such as Netflix a threat?
As an entertainment provider we are always competing for watch time. If our subscribers watch Netflix, they spend less hours with us. So even though Netflix is a different type of service, we are fighting for eyeballs. Local content, including local sports, is an important part of our offer and helps differentiate our product from the global offerings.
To remain competitive, we are keen to learn from industry best practices. Netflix is winning market share because it creates great content and allows its subscribers to access any video at any time, across any device. We are a cable TV company with a legacy of around 200 linear channels: to compete with this flexibility we need to offer additional propositions to enhance our existing pay-TV service. Five years ago, we started developing a VOD service combining our content with partners’ content, as well as anything else we could acquire. Over the years we have added more of our linear channels via IP, so we now have a very extensive content proposition.
How will the kind of content and services you provide change over the coming years?
In terms of content, I envisage the biggest changes will be around sport. So far, OTT services have transformed the way the industry delivers series and movies, but have had little impact on sports video. At least in our region, there is no significant direct-to-consumer (D2C) sports OTT product. This is partially due to technical challenges. Currently, linear TV can provide a better live sports service than OTT, offering low latency and more reliable coverage. In the next few years, however, I expect OTT technology will improve to the point that these advantages are largely eradicated, so we may see more sports content offers via OTT.
How are you implementing new technology to compete with new OTT services and to improve your product?
We developed a hybrid set-top box, which combines our linear channels with our VOD content into one seamless viewer experience. We started using middleware to integrate services from, for example, Fox, HBO and Turner, for whom we provide channels. Netflix isn’t on the box, as yet, because they are only interested in making deals with the largest operators – but if this changes we would be happy to consider integrating them as well.
One of the biggest challenges for us is ensuring we choose the right technical solutions for the long term, so we can evolve to meet future requirements. It is easy to invest a lot of money implementing new technologies that quickly become outdated. To avoid having to replace our technology, we have to consider what other operators are choosing and what solutions are being deployed in other markets.
What are the next steps in Nuevo Siglo’s digital transformation?
We have a library of 10 thousand titles – it is impossible for customers to look through all this without the right tools. So, two years ago, we acquired software to start offering our viewers content recommendations based on their previous content choices. The recommendation engine has been highly successful: the majority of content that viewers watch is now recommended by our platform. We are also constantly improving the metadata we feed into the platform, to improve the quality of its suggestions.
What threat does content piracy pose to OTT services in the region?
Piracy is a big problem. Pirates integrate thousands of stolen channels from around the world onto illegal set-top boxes for a subscription of $10-20 per month. In the last few years we’ve seen more piracy via IP, stealing content from VOD websites and even apps on smart TVs. Ad-supported online piracy websites are free to use and present a major threat to pay-TV services fighting for customers. We are working with content providers to improve the security of their content, and with industry associations to find the organisations selling pirated services. We have had some success identifying illegal distributors and taking down web pages, but as soon as one is removed, another appears. We have to continually fight against this new piracy.