The Pay-TV Innovation Forum is a new global research programme for senior pay-TV executives, developed by NAGRA, in partnership with leading research consultancy MTM, 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.
In this interview, Koby Zontag of PCCW Global, the international operating division of HKT, Hong Kongs leading telco, shares his views on how the pay-TV industry is evolving and future areas of innovation.
How would you describe the state of the pay-TV market today?
The pay-TV industry has changed significantly over the last five years, and the pace of change has increased due to the emergence of IP-delivery and new types of players entering the market. Five years ago, the pay-TV industry appeared to be in a relatively safe position and subscriber figures were growing constantly. The battle for pay-TV subscribers used to be between cable and satellite operators, but now IPTV and OTT service providers have become part of the competition, disrupting the historical status quo. Telcos have entered the pay-TV market with IPTV offerings that are usually bundled with broadband, providing a very competitive option for consumers. On the other hand, OTT service providers have strongly impacted consumer viewing behaviours and now increasing amounts of video content are being viewed on demand.
Today the pay-TV industry is facing two very important questions: what is the future of linear TV and how feasible will it be for content providers to create their own VOD offerings? I think that the pay-TV industry will have to adapt to on demand viewing and will still play an important role in aggregating and distributing video content to consumers. At the end of the day, most people still want to sit back and enjoy a great TV experience without the need to create their own video playlists from a number of different services that they subscribe to.
Do you think innovation is becoming more or less important to the pay-TV industry?
Innovation is definitely becoming more important to the industry, and companies are investing more in it. It is particularly important for market leaders who need to invest heavily to respond to disruptive technologies and innovate continuously to maintain their market positions. Pay-TV service providers will always face potential disruptions. Today, it is OTT services, tomorrow there will be something else, so they have to be ready. It is also important to note that with major Internet businesses, such as Google and Amazon, entering the video market, the lines between different types of TV and video service providers are getting blurred.
Looking ahead, what will be the most exciting areas of opportunity for pay-TV service providers?
At the end of the day, the key to the success of pay-TV service providers will be their content proposition. Why would consumers bother to subscribe to their services if they do not offer any desirable content? Without great content, it would be just a flashy set-top box that you could put in your living room. Service providers will focus a lot of their attention on offering great content, so we should see more original and exclusive content in the market and stronger partnerships between content owners and pay-TV service providers.
Multiscreen TV Everywhere services will also be very important for pay-TV service providers going forward. TV Everywhere is slowly becoming a must-have service for customers and it will soon become part of the most basic pay-TV service offering. Commercially, I see a big opportunity to bring more premium content, particularly sports, to consumers, allowing them to, say, watch football finals on the go. The key challenge will be monetising these TV Everywhere services, but there are various ways to overcome it, such as tiered pricing based on the number of supported devices or higher reliance on advertising revenue.
In terms of adjacent businesses, Smart Home solutions will be a very important way for pay-TV service providers to extend their presence in consumer homes by providing connectivity for all consumer devices.
On the B2B side, targeted TV advertising will be a major opportunity for pay-TV service providers as advertisers will be willing to pay more money for effective ways to reach their target audiences. Pay-TV service providers, broadcasters and advertisers will have to work together to find a mutually beneficial business model. Today, it might be more lucrative for some broadcasters to sell TV advertising on their own. However, with TV advertising rates getting squeezed by online advertising, it will be just a matter of time before targeted TV advertising becomes a reality.
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The Pay-TV Innovation Forum is a new global research programme for senior pay-TV executives, developed by NAGRA, in partnership with leading research consultancy MTM, designed to explore and catalyse innovation across the pay-TV industry, at a time of unprecedented change.
