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.
Pay-TV executives recognise the importance of customer and audience data as well as advanced advertising solutions, but agree that very few companies historically have had the scale and resources to harness and monetise them. The research conducted in 2016 showed that while only 4% of major pay-TV providers globally were offering advertising and data services, 54% of pay-TV executives saw advanced advertising and data services as a commercially attractive area of opportunity over the next five years. This is a strong sign that the pay-TV industry is likely to see significant developments in advanced advertising and data services.
In this interview, Oliver Hansard, Vice President Data Services at Liberty Global shares his views on developments in advanced data and analytics and how they can generate value for pay-TV service providers.
Why is there so much interest across the pay-TV industry in advanced data and analytics? What’s driving it?
There are three key forces driving the growing interest in advanced data and analytics across the television industry. Firstly, pay-TV operators are investing more in their capability to collect better, more granular viewing data from connected set-top boxes and multiscreen TV Everywhere apps, especially compared to traditional, sample based audience measurement tools. We are now able to understand viewership patterns over time in a way and with depth that we were never able to previously. Secondly, the new wave of OTT players, such as Amazon, Netflix, and Google, have analytics as part of their DNA and are already using their customer data to drive value and improve customer experience. As a result, consumers increasingly expect that their data is used to deliver personalised experiences, raising the bar for pay-TV companies. And finally, pay-TV operators are looking to maximise the value of their existing customers by understanding them better and offering them the products they want. As consumers are presented with more choice and cheaper alternatives, the pay-TV industry needs to work harder to deliver great content and customer experience - and data is key to that.
Has advanced data and analytics become a real strategic priority for pay TV providers?
Advanced data and analytics should definitely be a higher priority for the pay-TV industry than it currently is. It is becoming increasingly important, but many pay-TV providers are struggling to build the business model to support the investment. Indeed there is such a large investment required in terms of systems and skills ahead of value generation that many operators are not yet prepared to make the leap and invest; however, if they wait too long it will be too late.
What are the challenges facing pay-TV providers in developing advanced data and analytics capabilities?
By far the biggest challenge is organisational change. Pay-TV businesses need to learn how to do things in a different way, become more agile and foster a ‘test and learn’ culture. Obviously change is difficult without the right market incentives, but the television industry has had digital challengers for some time now and is on notice. A certain level of data literacy and data championing in the organisation is important too; a team who can demonstrate that data can help generate better and faster decisions. However, getting to the point where you can do that requires courage and investment from senior leadership.
Is there a role that technology solution providers can play in overcoming these challenges?
Technology providers play a very important role by bringing different experiences, expertise and use cases that demonstrate the value of advanced data and analytics. However, pay-TV providers need to have a strong desire to drive change themselves as it won’t work otherwise. They need to take a certain leap of faith when it comes to advanced data and analytics, which our business has done very successfully.
As the pay-TV industry is starting to develop advanced data and analytics capabilities, which industries do you see as the leaders in this area?
The retail industry is miles ahead of others, because historically they have been well-positioned to collect transaction-level data, track behaviour over time, understand frequency of purchase, and connect marketing activities to buying behaviour. The pay-TV industry has not been able to advance in this area, because it has not had the right skills and data. But now, as more and more operators are able to collect return path data from set-top boxes and connect it to other data sources, there is a significant opportunity emerging to build advanced data and analytics capabilities that can add material value.
You have mentioned return path data from set-top boxes – how can it add value to pay-TV businesses?
I’ve joined Liberty Global from the retail sector and I think there is a lot that the pay-TV industry can learn from retail. Retailers are truly winning in data and analytics, because in addition to understanding who’s buying their products and why, they can also track behaviour over time. And that’s very similar to what set-top box data can provide. It enables pay-TV operators to understand household viewing behaviour over time and get insight into specific behaviours, such as ad skipping, channel switching, or VOD usage. Operators and broadcasters cannot get that level of data and insight from traditional audience measurement tools, both in terms of granularity of data and behaviour over time.
What use cases of set-top box data do you see as the most commercially attractive?
There are multiple ways that viewing data from set-top boxes can add value to pay-TV businesses, including churn reduction; personalised pricing and packaging; cross-selling of products and services; and optimised content acquisition, scheduling and marketing. I am mostly interested in how pay-TV providers can generate revenue from advanced data and analytics externally, by delivering a value-added service to broadcasters and advertisers. For broadcasters, it is about helping them to maximise the value of their programme schedule by understanding how viewers migrate between channels and other types of content and how broadcasters can drive audiences to their channels. If the broadcaster gets its schedule right it benefits both the broadcaster, improving the value of its inventory, and the consumer, who gets great content. It becomes even more beneficial when broadcasters can connect the set-top box viewing data with data from their own online platforms. For advertisers, it is about optimising the value of ads they buy by applying viewing data in various ways, such as identifying the types of content that their target audiences over- or under-index against.
What is the role of partnerships between pay-TV providers, broadcasters and technology providers in delivering advanced data and analytics?
Partnerships across the TV ecosystem will be critical, because no single company has a view across the entire ecosystem. I think that we’ve got more in common in the TV ecosystem than not in common and we’re starting to see broadcasters and pay-TV platforms making common cause. There is plenty of scope for win-win partnerships if it’s done appropriately and I’m sure we’ll see more of them going forward.