NAGRA Blog: What does innovation really mean for a pay-TV provider?

By Simon Trudelle, Sr. Director Product Marketing, NAGRA

At the recent Pay-TV Innovation Forum, an overwhelming 85 percent of pay-TV operators believed that to grow, pay-TV service providers would need to innovate strongly over the next five years. Why? Well, with so much disruption taking place in the pay-TV market, providers are facing increasing pressure to transform business models and revamp strategies. But what can they do to combat the challenges they face? What does innovation truly mean for them? Here are just three areas they should focus on.

1. Technology

Other than incremental improvements to traditional hardware and software, providers may be hesitant to invest in technological changes. And who can blame them? Previous so-called “innovations” – such as 3D – were not the most successful. Even multiscreen and 4K/UHD have proved to be tricky undertakings. But like it or not, they have no choice but to innovate as consumers increasingly watch more video content without spending more on traditional pay-TV services. To do this, service providers need to be willing to listen to new consumer needs, reassess their business priorities and their role in the video and TV market. They also need to devise new services and commercial packages that can appeal to emerging generations of younger consumers, all while keeping traditional subscribers happy.

2. The User Experience

Consumers today expect access to all their content in one place, anywhere they are, with the flexibility to watch now, save for later or ‘binge on’. This requires a simplified content discovery process and a frictionless user experience, while keeping all “consumer types” happy and satisfied. Whether viewers prefer the traditional or more modern navigation, the user experience must provide the perfect path to content. Combined with powerful analytics, such a multi-journey, consumer-facing UI can deliver a truly personalized content experience that engages, creates stickiness, and monetizes.

3. Pricing and Packaging

The ways viewers consume content has changed, and so has the way they expect to pay for it. Some subscribers don’t want to pay for a huge range of channels they don’t watch, but at the same time, they don’t want to miss the thrill of live linear broadcasting.

That’s why providers are turning to skinny bundles, where subscribers pay for a slimmed-down range of channels and services for a lower fee, often with no fixed contract or set-up fees. Flexible pricing options can also be a simple, and relatively inexpensive, form of innovation for pay-TV providers looking to satisfy all consumers in an increasingly diversified, fragmented market.

The latest findings from the Pay-TV Innovation Forum support these trends with 90 percent of pay-TV providers surveys stating launching new products and services would be critical to driving growth. Some are already taking steps to be more competitive, having launched or planning to introduce new services within the next five years, whether it’s standalone OTT services (23 percent), mobile-first TV services (66 percent) or virtual reality or 360-degree video content solutions (39 percent).

Staying relevant in an ever-increasingly competitive pay-TV environment isn’t easy, but investment in innovation will be a significant boost to providers. By understanding and focusing on innovation in the three areas, service providers can create opportunity, continue to grow and retain their market leadership.