Pay-TV Innovation Forum reveals the 2017 challenges and growth strategies of North American pay-TV service providers

Evolving consumer expectations and habits driving service provider investments in OTT, cloud, analytics, anti-piracy and new business models.

Cheseaux, Switzerland – June 7, 2017 – NAGRA, a Kudelski Group (SIX:KUD.S) company and the world's leading independent provider of content protection and multiscreen television solutions, in partnership with MTM, a leading international research and strategy consultancy, today revealed the first wave of findings from the Pay-TV Innovation Forum 2017, which looks first at the state of the North American market. The global research program examines the state of pay-TV innovations and strategies that will drive the next phase of growth for the industry.

According to a panel of North American pay-TV service providers polled in April 2017, evolving consumer expectations and habits, along with a significant increase in on-demand content consumption, pricing pressures driven by new OTT offerings and simplified access to pirated streaming services, are driving a major transformation in the North American pay-TV industry. Some experts talk of a possible risk of significant revenue loss if the status quo were to be maintained.

To address these challenges, service providers are leveraging OTT, streaming and cloud technologies as well as advanced data analytics and anti-piracy measures to stay ahead of the game. In parallel, they are considering reviewing their pricing and packaging models and services to better respond to a more segmented market place.

Industry executives highlight three key priorities that will help to drive growth and ensure the North American pay-TV industry retains and strengthens its position as the most innovative and diversified in the world:

OTT, Streaming and Cloud Technologies: To attract younger audiences, pay-TV operators are focusing efforts on significantly strengthening OTT and multiscreen propositions. According to industry executives, there are strong generational differences in terms of perceived value of pay-TV services. Younger audiences expect to consume on-demand content on mobile screens versus the traditional linear TV environment and bundles preferred by older generations. As a result, operators are rethinking their pricing and business model approaches to better address all demographics and market segments. Cloud-based technologies can also help service providers compete more effectively with internet-based rivals.

Advanced Data and Analytics: More than half of industry executives polled cited advanced data and analytics as an area that will have a significant impact on the North American pay-TV industry over the next five years. Developments in advanced data and analytics will help pay-TV operators gain more flexibility and insight while reducing operating costs. As a result they can deliver value through highly-relevant, personalised content and user interfaces, targeted advertising and improvements to sales and marketing operations.

Anti-Piracy Measures: The threat of content piracy is growing in the North American pay-TV market. Key challenges include the emergence of illegal retail IPTV set-top boxes and apps, the growing costs of pay-TV subscriptions and the increased sophistication of pirates. However, new more holistic anti-piracy solutions and increased industry awareness, along with smarter legitimate on-demand TV services are expected to reduce the impact of piracy in the long term.
“North American executives clearly recognise that the industry is experiencing a period of change and disruption – and are making the investments required to remain competitive in a challenging market. This year’s research programme shows that the North American industry is moving forward, developing and extending product and service portfolios and addressing new opportunities. In areas like OTT, data and analytics and IoT, the region is leading the way,” said Jon Watts, Managing Partner, MTM. “There are clearly significant challenges ahead, as competition grows – but the pay-TV industry is on track to deliver improved value propositions to consumers. This is an industry in transition and it’s exciting to see the progress that is being made.”
“North American pay-TV operators have started to deliver improved value propositions to consumers that address the disruptive actions of the digital giants”, said Simon Trudelle, Senior Director, Product Marketing, NAGRA. “Service providers who are planning to develop and deliver better user experiences, new OTT services, leverage cloud and data analytics, while contributing to curbing the impact of piracy on the ecosystem will be able to maintain a leadership position with solid margins. Yet the intensity and pace of change in the industry calls for a new era of innovation-driven partnerships with content owners as well as technology vendors.”
The Pay-TV Innovation Forum explores the next generation business and technology developments of pay-TV operators around the world to uncover and understand what will drive the next phase of growth in the industry. Additional visuals and statistics on the North American research can be found in NAGRA’s “Pay TV Innovation Forum 2017 Key Trends and Developments in North America” presentation. For more information on the program and findings from the first year of research, please visit the Pay-TV Innovation Forum website.