ASIA-PACIFIC – Over-the-top services like Netflix have changed the game. According to a Nielsen study, globally, 32% of the respondents said they planned to cut the cord in favour of an online-only service. By 2021, the APAC region will have added 107 million new VOD subscribers, with a 220 percent surge in revenue through SVOD expected. Traditional pay-TV operators need to respond if they want to hold onto existing customers, minimise churn and attract new ones.
It’s not all doom and gloom for pay-TV operators. John believes that they are uniquely positioned to solve an increasingly chaotic entertainment experience for consumers by leveraging their strengths in live and recorded/VOD content availability, bringing OTT and pay-TV offerings together and upgrading to next-gen, cloud-based solutions that up the pace of innovation.
This piece is attributed to John Lee, VP, APAC Sales, TiVo, and outlines the top five IPTV challenges that pay-TV operators are faced with today and how to overcome them.
Read the entire piece below:
With the arrival of Video on Demand (VOD) services such as Netflix and HBO Go, IPTV has radically changed the way that content gets consumed by giving TV viewers greater control over the entertainment they want to watch. By 2021, the APAC region will have added 107 million new VOD subscribers, with a 220 percent surge in revenue through Subscription Video on Demand (SVOD) expected.
How will IPTV impact pay-TV operators? Here are the top five challenges that pay-TV operators need to surmount to thrive in the rapidly evolving IPTV landscape.
1. Streaming services are raising user expectations
Over-the-top (OTT) services like Netflix have changed the game. According to a Nielsen study, globally, 32% of the respondents said they planned to cut the cord in favour of an online-only service. In fact, this trend is the most pronounced in APAC, where 44% were willing to cancel their cable or satellite service for an online-only service.
Consumers today have far different—and far more diverse—expectations when it comes to entertainment content. Consumers have greater exposure to a range of OTT/web-based content, and that is influencing their perception of innovation and raising the bar for every player in the industry. They expect their pay-TV service to learn their tastes and continuously provide innovative new features and next-generation discovery options that allow them to connect quickly to content they like.
Traditional pay-TV operators need to respond if they want to hold onto existing customers, minimize churn and attract new ones. The good news is that pay-TV operators are uniquely positioned to solve an increasingly chaotic entertainment experience for consumers by leveraging their strengths in live and recorded/VOD content availability, bringing OTT and pay-TV offerings together and upgrading to next-gen, cloud-based solutions that up the pace of innovation.
2. Conversational voice interfaces are going mainstream
Voice interaction is entering the mainstream as tech giants like Google, Amazon and Apple heavily promote voice-based features and drive consumer adoption. This is driving pay-TV operators to look very closely at their own voice-based interfaces and how they can extend them to consumers. If done right, voice offers the optimal user experience for not only command and control but content discovery and navigation. It not only helps users get to their content faster but also enables operators to expose users to a much greater breadth of content. For example, voice enables operators to offer a highly personalized, highly conversational interface capable of addressing complex queries such as, “Show me popular sitcoms from the ’90s, available on Netflix.”
The ideal offering for operators is one that combines a deeply media vertical content solution with the broader voice ecosystems. Conversational voice interfaces are indeed prevailing, aligned with the prospect of smart homes taking off in the region. AT Kearney found that Asia’s smart home market will reach $115 billion by 2030, accounting for 30 percent of global share. Japan is ahead of the curve in the region, producing smart homeware that involve conversational interfaces.
3. Operators are embracing Android TV and unmanaged devices
Google has been continuously listening to operators and with Android TV’s Operator Tier, addressed concerns around security and control. Android TV is highly attractive to operators for a number of reasons. In addition to being able to address a wide range of devices that consumers can access content on, the OTT ecosystem available through Google Play brings together thousands of apps that operators can instantly tie into. Ovum found that out of 300 industry professionals in the TV service provider industry globally, 72% are considering Android implementations as part of their set-top box strategies. 50% saw Android as important for their goals within the next five years including availability of new features and services, faster time-to-market, an attractive user interface and cost efficiencies.
However, as content grows, so does the need for a superior, differentiated and consistent user experience flowing across all client platforms and backed by a powerful cloud service that’s flexible, agile and scalable. It is paramount for operators to have the technology ready for the implementations to be flawlessly carried out given the interest in the region.
4. Cable operators are starting the transition to IPTV
As operators look to IPTV, they’re encouraged by new and unique revenue opportunities, such as the ability to provide more OTT-like services to certain market segments. But many operators wonder how they can they transition from their current infrastructure to IPTV, while controlling costs and minimizing disruption to users. Some operators will manage the transition more seamlessly and cost-effectively than others and that will make a significant competitive difference. Competition in the APAC online video market will intensify, as Netflix and regional competitors Hooq, iFlix and Viu make similar bids for suscribers, and operators need to be prepared.
Research by IHS Markit found that online video services is growing and mobile devices will account for growing amount of video viewing in APAC. Online video revenues increased by 50% year over year, reaching $16.2 billion in 2017. The surge in online video usage will also continue, with online net subscriber additions forecast to outstrip those of pay TV between 2017 and 2022.
The reality is that the right next-gen solution can provide versatile deployment options—from Quadrature Amplitude Modulation (QAM) to hybrid to full IPTV. Such a solution can assist operators in their transition to IPTV by maintaining support for QAM deployments, while still offering a flexible migration path by addressing the capital expenditure, networking and rights constraints of the operator. As a result, operators can address their most strategic concerns while quickly adapting to the evolving needs of customers.
5. Dynamic features and partnerships are rising in importance
These days, new enterainment features pop up all the time, and pay-TV operators need to be evaluating their services on a daily and weekly basis, rather than quarterly or annually. The best way is by leveraging a cloud service that gives operators the flexibility to anticipate market needs or consumer trends, as well as the robust ability to roll out quickly across all device platforms.
Savvy operators are starting to bundle OTT services like Netflix with their own offerings because such partnerships open up new opportunities for them. In fact, in a market that is increasingly fragmented, there is a window for providers to serve as the starting point for consumers’ entertainment experience and guide them through the maze of content options. The goal is to own the race track, not the individual horses.
A Media Partners Asia report found Pay-TV industry stakeholders are managing these competitive realities with technology upgrades and new bundles that package together pay-TV and broadband services. Demand for Asian premium content, led by Korean entertainment, continues to grow. Content increasingly shifts online with OTT operators bidding up the cost of popular franchises. In April, Tata Sky and Netflix entered a partnership to provide subscribers with access to content through Tata Sky platforms. The partnership is slated to add another dimension of providing worldwide quality content on-demand for subscribers.
In the days ahead, IPTV will become an increasingly important part of the broadcast landscape in APAC. With the prevailing digital revolution, operators that look beyond traditional business models and embrace emerging IPTV opportunities will emerge triumphant in the APAC broadcast industry.