The Pay-TV Innovation Forum is a global research programme for senior pay-TV and content executives, developed by NAGRA and MTM, and designed to catalyse growth and innovation across the global TV industry, at a time of tremendous change and disruption.
As part of the programme, we are publishing a series of interviews with leading TV industry executives from around the world to explore their views, perspectives and experiences of innovation. In this interview, Andr s Delgado Rey, Director of ClickVeo! shares his views on the future of pay-TV and the transition to OTT in Uruguay.
What trends are shaping the pay-TV market in Uruguay?
Uruguay is a digital pioneer: we had the first 5G network in Latin America, we completed the digital switch-over in 2015, and we were leaders in rolling out fibre optics. Internet penetration is almost 70%, and of that, the majority are fibre optic connections. We have the perfect conditions for OTT, despite being a small market.
There is high pay-TV penetration in Uruguay, but in the last two years the number of subscribers has started to fall. The market is changing, and TV operators are having to respond, with almost all having launched an OTT platform to reach viewers moving online.
This is important as OTT does not have to be a threat to traditional pay-TV operators. We believe our service is complementary to the existing players. We see cable operators as potential partners: we can offer them exclusive content and, in return, benefit from their distribution infrastructure. It is an advantage for us that pay-TV operators all have their own OTT platforms as it makes it easy for us to combine and share our content.
What lessons can OTT services learn from the pay-TV industry, and what challenges are unique to OTT?
Pay-TV operators have made signing up to their services really easy - OTT services need to match that consumer experience. Marketing, subscriber management and customer support are all key to building and maintaining positive customer relationships.
Consumer demands around flexible bundles are pressuring OTT services. Increasingly, consumers don't want to commit to long contracts, preferring to buy subscriptions on a monthly basis. It is a challenge for us to manage subscriber churn and means we really have to concentrate on refreshing the user experience to keep our subscribers interested in the platform. We are constantly changing the front end and publishing new content.
In addition, shorter subscriptions make it difficult for us to plan our spending compared to the one or two-year contracts pay-TV operators traditionally command. We struggle to forecast our future cash flow, which makes investing in content difficult.
What threat does content piracy pose to OTT services in the region?
In South America, generally, we have a cultural problem: piracy is so common, people don't realise it is illegal. The two major types of piracy are illegal streaming websites and unauthorised account sharing. Each presents different challenges. If our exclusive content is made available for free on pirate websites, it can be really damaging for our content value. We work with the largest local telco, Antel, as our security partner, using their CDN to keep our content safe.
In terms of account sharing, currently ClickVeo! only allows one device per account. It helps in the short term, but it is not a long term solution. I don't think it is something we can get rid of completely, people will always find a way to get round the barriers we put up, but we will not stop fighting for change. We need to change the culture first: people need to know that piracy is stealing.
What do you think will be the most important trends and developments facing the pay-TV industry over the next five years?
With each channel seemingly opening their own OTT service, the pay-TV operators' role will increasingly be to bundle and package different services, rather than channels. In the next five years, technology may even allow operators to offer each of their customers a bespoke package containing only the channels they wish to pay for.
I don't think all viewing will migrate to VOD - some viewers will still want to watch live TV. Smart TVs should help combine VOD and live with seamless access. The fragmented experience viewers have today, moving between a number of different apps and webpages to search for the content they want, is too frustrating. If customers can buy individual channels direct through their TVs, demand for pay-TV bundles may decline. On the other hand, many cities around the world still do not have sufficient internet to support a widespread migration to OTT, so a role will remain for traditional TV operators to supply these populations.
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The Pay-TV Innovation Forum is a global research programme for senior pay-TV and content executives, developed by NAGRA and MTM, and designed to catalyse growth and innovation across the global TV industry, at a time of tremendous change and disruption.
