Justin Hewelt
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Can pay TV stations compete in the digital era? Justin Hewelt, global director for PayMedia, UK certainly thinks so. Hewelt is in South Africa this week to speak at the IAB SA Digital Summit on 1 March. We caught up with him to get his views on the pay TV world in a Netflix era and other things South African marketers need to know.
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Q: Pay TV stations in South Africa are losing subscribers hand over fist to digital services like Netflix is this a global trend and how can Pay TV companies work to counter this?
JH: I'm not sure that pay TV is losing subscribers hand over fist' but consumer choice is increasing and pay TV has to adapt to a new economy. This means a more competitive market, more flexibility and a wider range of price-points and options than has been the case to-date. The outlook is positive for the industry and consumers alike, but here are some of the factors I believe will be critical as we go forward:
Content is critical Consumers now have more choices when it comes to accessing TV services, be they live or on-demand. Despite the arrival of services like Netflix and Amazon Prime Video, and growth of free-to-view TV services, the impact of cord-cutting' - an American term for when customers cancel their cable subscription really depends on the content proposition of pay TV operators. Operators that invest in original content are better placed to transition to the new economy than operators who are simply re-transmitters of international channels or telcos whose primary concern is to drive connections rather than entertain audiences. Netflix has a role to play in delivering and commissioning original content, but Netflix alone, or even Netflix and Amazon combined cannot serve the needs of all consumers.
Live vs On Demand Analysing consumer trends, TV viewing behaviours tend to depend on age group, with younger audiences now watching fewer hours of live TV. However, in all segments, live TV viewing still dominates. Major shows like X-Factor, The Voice, Dancing with the Stars and other shiny floor' formats continue to deliver large live audiences, as does sports, news and other live programming. These live shows also drive significant engagement on social media. VOD usage continues to grow as fixed and wireless broadband access becomes less expensive and consumers adopt advanced set-tops, tablets and smartphones.
The operators best placed to challenge Netflix and other new entrants are those who embrace on-demand, and who allow consumers to access the content they want, when they want, on the devices they want. Much of the exclusive on-demand series available on leading premium services like HBO, Sky, FOXTEL or DStv are only available live and on-demand on those platforms, and are unlikely ever to appear on Netflix, Amazon Prime Video or other emerging OTT services. The pay TV industry is adapting as the landscape changes, developing new ways of delivering advertising and finding ways to target audiences across both live and on-demand programming.
Global vs local Despite continued investment in original content, and a gradual broadening of genres (Netflix recently launched chat-show formats) Netflix is a global business that has to plough a middle ground. It commissions content in a narrow set of genres which it knows will play well internationally, as well commissioning specific shows for specific markets or languages. However, Netflix's investments are strategic and designed to win new customers. Outside the US it is not able to invest in the wide range of local content that audiences have come to expect from the more established pay TV businesses.
Insight Much has been made of Netflix's data capabilities and the insight they have into viewing behaviours. However, local pay TV businesses, particularly those who have connected set-top boxes and streaming services like Sky Go and DStv NOW are best placed to understand the viewing behaviours of their subscribers across multiple channels and VOD titles. Their understanding of customers, tastes and preferences are potentially far greater than the genre-specific narrow view of many emerging OTT propositions. Traditional operators that use insight will be in the best position to understand not just data, but local cultural trends and behaviours and evolve shows that those audiences are likely to respond to. They are also best placed to match audiences, households and even individuals with advertisers and adapt different creative executions for different segments to help advertisers maximise efficiency, engagement, effectiveness and return on investment.
Q: What is the one big trend in the global media space that South African marketers need to know about in 2018?
JH: Data and data privacy. South African marketers need to work with their clients and advertising platforms to understand how to build a sustainable insight and data capability, and through this, better understand the needs of consumers and the customer journey to build more effective and efficient ways of advertising.
Building a capability now, ensuring information is captured, stored and managed in sustainable ways, and learning through trials and A/B testing will help the industry better position itself for an increasingly complex future. At the same time, the European Union is setting out clear regulations around data privacy through the General Data Protection Regulation (GDRP) and it is likely that these regulations will inform regulation in other markets as global businesses seek to ensure compliance worldwide. Understanding how to build more targeted campaigns based on data and insight, whilst respecting regulations and standards around data privacy will enhance return on investment, and through regulatory compliance, will help to ensure ongoing consumer t
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Justin Hewelt
