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, Luciano Ramos, VP Technology & Product at Liberty Latin America, shares his views on the threat of piracy in Latin America and the Caribbean and pay-TV provider approaches to fighting it, key characteristics of next-generation pay-TV providers, and potential ways for pay-TV companies to compete with global OTT providers.
How is piracy impacting the pay-TV markets in Latin America and the Caribbean?
Piracy in our region, in some cases, is a bigger driver of cord-cutting than OTT services. Pirate organisations, some of which even have brick and mortar shops, are among the largest TV operators in certain countries in the region. Enforcement of copyrights and related laws and regulations is also lacking as consumers can easily buy hacked Android or Roku devices from a shopping mall. At the same time, the pay-TV industry has created a very complex ecosystem that needs to account for various content protection requirements, content licensing agreements, and other rules, resulting in a less than perfect user experience. As a result, many consumers choose the often more user-friendly ‘click and play’ experience delivered by pirate services.
How can the pay-TV industry respond to the threat posed by content piracy in the region?
There are two elements to pay-TV providers’ strategies for fighting piracy – one is technical, the other is legal. On the technical side, companies like Nagra run services to crawl through the Internet and use fingerprinting to identify who’s gaining unauthorized access to a signal or a piece of content. On the legal side, in Spanish-speaking Latin America the industry has formed Alianza, a consortium of content providers and pay-TV operators who are looking to prosecute pirates and create awareness that piracy is illegal and that it damages local economies. We’re trying to follow a similar approach across the other parts of the region. In some cases, the pay-TV industry still needs to get governmental and regulatory authority buy-in, convincing them that the erosion of value due to piracy has a direct impact on government income – via lost taxes and broadcasting fees – and on employment.
What are the most important enablers of innovation in pay-TV?
It’s a combination of technological breakthroughs and the ability to innovate around the overall value proposition. However, it has to be more than just upgrading the technology platform. Pay-TV providers need to go deeper and re-evaluate the whole value proposition. Most customers do not want to buy bundles of 300 channels in order to be able to watch only a few of them.
On the technology side, pay-TV providers are definitely in a much stronger position than they ever been, with many transitioning to all-IP. This enables pay-TV providers to build engaging user interfaces, introduce voice control, and make use of artificial intelligence, machine learning and deep learning algorithms that will identify the best content for a particular customer. In the coming years, pay-TV providers will have to focus their investment into these areas to be able to differentiate their user experience.
Combined with a great broadband experience, these things can help reduce cord cutting. Pay-TV providers will have to embrace new business models and broader distribution, as they strive to improve profitability – through creating efficiencies and delivering the right content mix that will appeal to subscribers.
How will pay-TV services look like in 2023?
Pay-TV providers will have to become much more efficient and flexible. Many providers will have completed the transition to all-IP, with some choosing to deliver services on third-party set-top boxes and, in this way, taking the cost of building a proprietary set-top box out of the equation. Many providers will also go through digital transformation of their businesses, meaning that they will be outsourcing many aspects of their operations and turning to self-service, self-installation, and online services to create efficiencies and improve customer satisfaction.
Pay-TV providers will also be offering a wider range of services to cater to different customers. I believe the industry will in time resolve the current issues with content rights, and all acquired content will be 100% multiscreen. While optimising the offering for the existing customer base, pay-TV providers will also have to find ways to attract and re-engage new, younger customers. Acquisition of this segment will be primarily driven by fixed and mobile broadband services and not by pay-TV services as we know them today. To get customers to love them again, service providers will have to pursue new forms of content partnerships and bundling deals which are, for example, based on sharing revenues, offering different margin profiles than a typical pay-TV bundle today.
How can local pay-TV providers compete with global OTT providers such as Netflix?
The pay-TV industry needs to find a way to become more global – that’s one of the advantage that major OTT players have over pay-TV providers. I’m not saying that there should be a pay-TV company spanning 200 countries: individual providers could maintain their local operations in each country, while collaborating more closely with their peers in other markets. The pay-TV industry should explore how it could become a global services network. This could help generate savings on product and technology. It’s a bit of a utopian concept, but at some point the pay-TV industry will need to have this discussion. We’ve seen some attempts to do this already, but they’ve been led by individual companies and were not truly global.