The DTVE anniversary survey

To celebrate Digital TV Europe’s 30th anniversary, we asked a panel of industry experts 30 penetrating questions about the future of TV. 

1. What do you think will be the single most import trend to impact the digital television space in 2015? 

For respondents to our survey, OTT, ultra HD, the blurring of the lines between broadcast and broadband, and multi-device delivery are the key topics for the year ahead.

“Digital TV is adding the ability to address individuals as well as households: we are already in the midst of a large scale evolution from a single main screen to multiple screens, the majority of the new ones being personal screens particularly smartphones and tablets,” says Ed Barton, head of TV and principal analyst at Ovum. OTT services are driving the idea that viewers are individuals and personalisation is key. Pay TV operators are following this trend.

For Steve Plunkett, CTO at Red Bee Media, 2015 will be crucial for UHDTV. “There is an increasing consensus that more pixels will not provide the average consumer with enough benefit to justify the end-to-end costs,” he says. “With more 4K TV sets arriving in the shops, despite a lack of industry agreement on exactly what Ultra HD is, should be, and how it is to be delivered, we risk a consumer backlash down the line. This is why we must make progress on UHDTV in 2015.”

Simon Walker, chief commercial officer and president at multi-channel network (MCN), Rightster, on the other hand focuses on the fact that “the line between traditional and online is going to become even more blurred” and believes the online migration of ad spend will have a major impact.

Steve Shannon, general manager, content and services at Roku also believes that “we will see more major TV networks offering their content to consumers over the internet”, citing plans by HBO and CBS to launch OTT streaming services this year as well as the recent Sling TV launch.

For Jette Nygaard-Andersen, EVP of Nordic pay TV operations at Modern Times Group (MTG), multi-device distribution is the key trend, along with a need for pay TV operators to differentiate themselves through superior customer service. “It will be increasingly important for service providers to be able to cater for how the individual subscriber wants to consume content,” she says.

2. What do you anticipate will be the most disruptive new technology in the coming years?

Personalisation, cloud and hybrid technologies will have a disruptive impact on the TV industry over the coming years.

“Personalisation, as a single theme, will be very important and could change the nature of broadcasting,” says Red Bee’s Plunkett.

For MTG’s Nygaard-Andersen, data analytics and the cloud will have the greatest impact. “I believe the technologies that are most likely to facilitate disruption across entertainment are those associated with data analytics and cloud storage,” she says. “The effective harvesting, analysis and management of data will better facilitate personalisation of content, services and price packages for consumers.”

For Régis St Girons, CEO of TV technology firm HTTV, “technologies that properly mix broadcast and OTT in the TV will make a difference in the coming years”. He highlights Android, already used by multiple TV manufacturers, and the HbbTV standard and notes that the pair  “could be combined for the better as they are complementary”.

For Roku’s Shannon, the application of internet advertising techniques to TV streaming services “will enable new business opportunities and models that we haven’t seen before. I am confident that it will change the world of TV advertising forever.”

Luke Gaydon, VP of strategic initiatives, media at OTT video specialist Brightcove, says the democratising effect of live streaming and other new technologies will change “the notion of ‘premium content’”, expanding it beyond movies and broadcast series.

Ovum’s Barton, on the other hand, believes that “the impact of cloud computing and technology has yet to be fully felt” with cloud-based broadcast and DVR services and digital lockers likely to grow in appeal.

3. How different will the broadcast industry look in five years’ time?

With the full impact of disruptive technologies still to be felt, major changes may be in store for the broadcast business over the next five years, and that is certainly the view of Jim Denney, VP, product marketing at TiVo.

“A few key factors will be that mobile consumption will continue to grow.  Personalised experiences are going to be critical and streaming, whether from the operator or from other OTT sources are going to be an even bigger part of the overall experience,” says Denney.

OTT and non-linear consumption will likely be the major sources of change, unsurprisingly. “Increasing amounts of revenue will be created through cable VoD, internet services, mobile services and OTT, for example,” says Brightcove’s Gaydon, who believes unbundling and flexible packaging will be the norm. “As this shift of revenue to digital delivery continues, broadcast will be another distribution endpoint but no longer the distribution endpoint.”

For St Girons, the flexibility of OTT could mean that pay TV operators – the drivers of the broadcast business in mature markets – will ultimately dispense with set-top boxes altogether, despite the role of these boxes as a differentiator up to now. “Pay TV operators have already started extending their services on consumer tablets and smartphones. Thanks to Android or HbbTV 2.0 or a combination of both we could envisage that in five years’ time pay TV operators will also take full advantage of the hybrid TV sets and get rid of their proprietary STBs,” he says.

Roku’s Shannon goes further. “Personally I expect the pay TV market to decline as a result of streaming services that will thrive in the coming years,” he says.

The industry will clearly be different in five years’ time, but how different is still a matter of debate. “Not as different as Google thinks it will, but more different than ITV thinks it will,” says Claire Tavernier, managing director at  Shine Group-owned MCN ChannelFlip.

Ovum’s Barton also believes change will be gradual. “Outside of technology and service evolution I think it will look broadly similar to today, certainly in terms of the composition of the value chain,” he says. “One change is that more TV will be sold in bundles with fixed and mobile broadband than today. There is unlikely to be some grand disruption by a technology titan as has been much speculated upon over the last half decade.”

For Nygaard-Andersen, the essentials of TV will remain constant.  “Things will change, but the cornerstone is still content and the great stories we can tell and share with our viewers and each other,” she says. Nevertheless, she says, there will be “major shifts in the power balance and emergence of a new, parallel OTT value chain” with “device and infrastructure players [taking] new roles in the value chain” leading to new constellations and partnerships.

4. What impact do you think the spending power of OTT players will have on the content market in 2015?

OTT players including Netflix and Amazon have emerged as big content players in their own right. For MCNs, business is also booming.  “It’s a great time to be producing premium scripted content, and this will continue in 2015 as the competition for talent in this space increases. I think this will benefit primarily English-speaking productions though, and it will be interesting to see what happens in markets with strong local language producers, such as Germany, France or Italy,” says ChannelFlip’s Tavernier.

“Much of the focus to date has been on long-form scripted dramas like House of Cards and Orange is the New Black, but as the Golden Globe for Amazon’s comedy Transparent demonstrated there’s a lot of excitement about other genres too. It’s all good news for the creators of great intellectual property,” says Righster’s Walker.

5. Are there still fresh opportunities  to be had for traditional media companies in the OTT space? 

Despite the emergence of new players, traditional broadcasters are increasingly playing a role in the OTT space. “There are absolutely interesting opportunities in that space for a bundled approach between OTT and broadcast. Some of the US cable channels are trialling various options to go direct to consumers. Finding the right partnerships on an international basis will probably be key here,” says Tavernier.

6. Will OTT supersede pay TV in the next 10 years? 

Whatever the disruptive power of OTT, broadcast pay TV still has staying power, and even OTT players themselves do not believe streaming services will take its place.

“I think the definitions of what we mean will change. The audience doesn’t care whether content is shown on an internet delivered service or a packaged cable or satellite service. The success comes from coupling great content to a great consumer experience. The value proposition for paid TV may have to evolve, but it’s not going to be beaten outright by OTT in the next 10 years,” says Righster’s Walker.

“I would expect pay TV to remain propped up by sports rights for the next few years. OTT doesn’t have yet the capacity for mass broadcast of popular sports events,” agrees ChannelFlip’s Tavernier.

7. How will the success of short-form content on sites like YouTube influence the programming strategies of broadcasters?

While OTT will not ‘beat’ broadcast, it will influence broadcasters. “Short-form video’s success is all about the talent. Staying relevant is at the forefront of broadcasters’ programming strategies as MCNs see rapid growth rates from this massive young online audience base. Short-form video stars, who have built an audience primarily on online platforms such as YouTube, have taken the limelight,” says Walker, citing the growing popularity of YouTube personalities among the young. “From Rightster’s acquisition of Base79 and Viral Spiral Group, to Disney’s purchase of Maker Studios and Big Frame’s sale to Dreamworks, online video businesses and the talent and content they work with are hot properties in today’s market,” he says.

8. Do you predict an increase in the number of online originals being made and trialled by non-online content firms such as linear broadcasters?

For the MCNs, the clear answer to this question is ‘yes’.

“Absolutely – a prime example of the shift to online originals is Simon Cowell announcing at last year’s MIPCOM that he plans to launch Syco Entertainment’s next show on a digital platform rather than with a traditional broadcaster. In his keynote speech, he proclaimed: “I think it’s a bit of a game changer. The market for our shows is three times the size of what we had two or three years ago,” says Walker.

“We already know there will be more coming from the BBC and C4. The question is whether they’ll be successful. The BBC Taster channel is interesting conceptually, but remains very experimental, and will struggle to get returning users without heavy promotion,” says Tavernier. “Channel 4’s strategy of strongly linking online original with broadcast programmes, as in Cucumber, Banana, Tofu, is also worth looking at. Ultimately though there still is quite a limited understanding within broadcasters of what makes a good online original.”

9. Does the acquisition of MCNs or web content aggregators by traditional TV companies make sense?

For MCN executives, the acquisition of MCNs by broadasters can make sense, but only if it’s done in the right way.

“Due to the talent and content they work with, many MCNs are in demand, which can be seen as both an opportunity and challenge to traditional TV companies. For those broadcasters who have already joined the online video revolution, this is an amazingly exciting opportunity. It’s only a challenge for TV companies that are not involved,” says Walker.

Tavernier is more cautious. “It will very much depend on how the companies are integrated – or not,” she says. “The track record of traditional media companies buying tech startups is dismal. We are seeing at the moment two main strategies – an arms’ length approach, which is what the RTL Group seems to be doing with their assets, and a very aggressive integration push by Disney around Maker. Both strategies can work if they are managed correctly, but we will have to wait and see.”

10. What challenges still exist when it comes to offering content anywhere, across any screen?

Multiscreen delivery is now a must for OTT players and broadcasters alike, but challenges remain.

“The landscape for delivering video content to any screen, reliably and with quality, is still highly complex,” says Brightcove’s Gaydon, with new devices coming out constantly and content providers having to take decisions about which new and legacy platforms to support. “New TVs are introduced with more features but it doesn’t mean people will refresh. Legacy devices affect performance, expectations on connectivity and features. As a result, supporting legacy can stall innovation, yet it is still a necessary part of the equation.” The broad lack of consistently-applied standards for content protection, advertising, analytics and audience measurement implies “an intimidating level of fragmentation”.

For pay TV broadcasters themselves, ease of use and access is key, according to Modern Times Group’s Nygaard-Andersen. “We work closely with licence holders to secure rights that match the different platforms in the best way. The industry is gradually breaking down barriers existing around rights, access and distribution,” she says.

11. Can pay TV operators and broadcasters make additional money from TV everywhere services?

Offering multiscreen may now be obligatory, but making additional revenue from it has proved challenging as consumers come to see it as a standard feature. However, broadcasters and OTT providers believe making money is possible.

“TV Everywhere and multi-screen services are very popular and in great demand, as they offer customers true additional value, therefore TV Everywhere products will enable us to stay relevant and is part of a premium service. So TV Everywhere can offer both revenue opportunities as well as acting as a customer retention driver,” says MTG’s Nygaard-Andersen.

For Brightcove’s Gaydon, advertising can deliver value to OTT players, while the retention power of multiscreen can benefit pay TV: “The more mature VoD services that we work with have been generating positive revenue for over two years now and traffic for VoD services is increasing year-on-year across the board. Online CPMs are now there or thereabouts and services like Netflix have proved that there is a strong appetite for paid content. For pay TV providers, additional OTT services increase ‘stickiness’ and loyalty to the core business.”

12. How long will it be before ubiquitous access to content across devices becomes the norm?

Pay TV operators are increasingly agnostic about how to reach consumers, although the set-top box remains a key component. “Today we offer a portfolio of entertainment products to our customers. The way we view our pay TV services is not bound by platform or device, but by offering a portfolio of different content, products and services,” says Nygaard-Andersen. “Our goal is to create a great customer experience by offering the best and most relevant stories and content for all platforms, which we can only achieve by understanding what our customers really want and being innovative on behalf of the customer all the time.”

For Brightcove’s Gaydon, ubiquity is already the norm.“I’d argue that we’re pretty much there now. Consumer demand for video content keeps growing. That content might not all be ‘professional’ or ‘broadcast’ content yet, but that doesn’t matter,” he says. “All video offerings, whether professional or otherwise, are vying for our limited attention spans. The challenge to service providers will be to keep up with this demand and with the next wave of technological innovations in the consumer electronics space.”

13. How far do you believe cloud-based linear TV platforms will become the norm in the coming years?

One of the technology innovations that is having most impact is the availability of cloud-based delivery of services, thanks to ubiquitous connectivity.

“The question is how long until linear workflows switch wholesale to the cloud. This is the area where the timeline is going to vary by region. But very few are disputing that the cloud is the way that linear TV will be distributed in the future,” says Gaydon.

“The technology will support it.  This form of distribution can have a significant impact on the landscape if content licensing permits it,” says David Sandford, VP and general manager, international at TiVo.  However, he says, the growth of on-demand will be key. “Cloud based linear only changes the delivery mechanism, not the consumer value proposition,” he says.

14. How far do you think regulatory and legal setbacks such as the block on Aereo in the US will hinder the development of cloud TV?

The Aereo judgement in the US has placed a cloud – so to speak – over cloud delivery, but this has, according to Brightcove’s Gaydon, a silver lining. “I’d suggest that Aereo’s approach, as judged by SCOTUS, was less of a comment on cloud TV and more a judgment on their implementation of cloud TV and its violation of the regulatory structure within the US,” he says. “However, the positive outcome of Aereo is that it demonstrated the consumers’ desire for these types of services and raised awareness of the legal and technical challenges for the industry. IT has helped the participants to challenge decisions that were made in a very different technological context.”

15. To what extent do you think cloud technologies will transform TV?

The broader impact of cloud technology is clearly going to be significant. “Cloud based technologies will have a massive impact on the future of TV. From Cloud distribution, to experiences, to big data technologies for recommendations and analysis, the cloud will impact every aspect of the TV experience,” says TiVo’s Sandford.

Brightcove’s Gaydon agrees. “One thing that ‘the cloud’ has proven across industries is that it accelerates the rate of innovation – people can write and iterate applications faster than ever, and this applies to the pace at which content providers are experimenting with different content distribution options – for example, EVS and SnapChat,” he says.

16. How do you think the role of the second screen as a tool to enable viewers to interact with TV will evolve in the next few years? 

Second screen interaction is now commonplace, but more innovation lies ahead. “If you watch TV you need to know what’s on, and most existing TV guide experiences are so awful that there’s clearly an opportunity for a refreshing take on finding something to watch. People love TV guides, but there’s no viral social factor to them, nor great sex appeal, and so this market category is thriving, but not generating a great deal of press attention,” says Anthony Rose, founder of second screen app provider Beamly.

“Smartphones and tablets offer a better control interface than the big screen, but direct connectivity with that screen is still clunky. I’m looking for smoother auto-discovery and the next generation of Google Cast and Airplay. Opted-in push notifications from TV to smartphone/tablet, and a host of mainstream casual games built for two screens will, I hope, create new types of family-orientated entertainment and educational experiences,” says Tom McDonnell, co-founder and CEO at second screen specialist Monterosa.

“I think we will see more innovation in this space. As content to the primary screen is delivered to a connected device, rather than a one way broadcast outlet, things could get a lot more interesting,” says Red Bee’s Plunkett.

17. Will there be a rise, fall, or a leveling out in the popularity of dedicated ‘second screen’ apps?

While second screen innovation still has a way to go, how the second screen experience is structured is a matter of debate. “This depends on the quality and utility of dedicated apps. It does feel as though the initial excitement and industry hype around second screen apps has waned so there is a risk that the whole concept loses consumer interest. Unless we see something new I think the popularity will fall away,” says Plunkett.

However, McDonnell disagrees. “The fact is, for bigger shows on bigger networks, dedicated apps work. They generate enough usage to be valuable to brands and can encourage commerce, data capture and other monetisation,” he says.

“The vision of second screen companies was a future where programme makers created new forms of entertainment that didn’t just beam out at users, but allowed users to participate in the show. That is happening, but more slowly than many had hoped for,” says Rose. “The only problem is with the term second screen – for my part I never liked it and we never referred to ourselves as a second screen app – that would be defining your market segment based on a user’s device or seating position. Instead, we use the term participation TV, and that is something that’s the equivalent of, and as inevitable an update, as allowing people to comment and share in your web site.”

18. Will TV become more personalised and less of a common experience?

While a full picture of the future of the second screen has yet to emerge, there is general agreement that the future will be personalised. “I expect TV to become much more personalised going forward. Everything from the content recommended to you on a VoD platform, to the ads served during a show and the linear schedule itself will be much more contextual. This will drive the adoption of connected devices and standalone broadcast TV will look increasingly outdated,” says Red Bee Media’s Plunkett.

“All TV will become more personalised; even live TV will have companion content, stats etc. that audiences can switch on or off. I think viewing will diverge with live broadcast event TV at one end of the spectrum and on-demand drama, factual and niche content at the other. However, that’s all from a broadcaster-centric viewpoint. From an 18 year old’s perspective, none of that matters and they’ll spend more time on YouTube, SnapChat and other ways to watch video,” says Monterosa’s McDonnell.

19. Will the TV will be at the centre of the connected home?

For cable, IPTV and other pay TV operators, if OTT TV is both a threat and opportunity, their role as gatekeepers to the home does open up the possibility of playing a key role and more and more devices become connected.

“It is likely that the TV will have a special role to play in the connected home. As a relatively large shared space and focal point within the home it would make sense to direct information to it. For example, flashing an alert on the screen when home energy consumption goes beyond a threshold or switching a video feed from the door entry system when a caller is outside,” says Red Bee Media’s Plunkett.

Monterosa’s McDonnell agrees that the TV will be key: “TVs, their operating systems, and devices like Chromecast and Amazon Fire are finally getting a lot better.”

20. Will the Internet of Things have an impact on how consumers engage with and consume media?

Ubiquitous connectivity will, most agree, have a transformative effect on people’s lives, not least in the way they consume media.

“The Internet of Things helps to provide context and interactivity with our physical environment. The everyday and mundane objects that surround us will gradually transition from being passive to active. It bridges the worlds of atoms and bits, so it would be very surprising if that did not impact our relationship with media going forward,” says Plunkett.

Monterosa’s McDonnell agrees, but with reservations. “In sports, player tracking will totally change how fans enjoy sports. Smartwatches will fail to ignite in the way everyone thinks, then someone will crack it and we’ll all be wearing them,” he says.

21. Beyond TVs, tablets, smartphones and game consoles, will other video-ready devices be widely used in the coming years?

How ubiquitous connectivity exactly shapes the pattern of media consumption is difficult to predict.

“The Internet of Things is predicated on a notion that anything that will benefit from a networked connection will get one. The same could prove true for video enablement of many devices,” says Red Bee Media’s Plunkett, citing the longer-term potential of smart watches that provide video, currently held back by cost and battery constraints. He also highlights the possibility of “fridges and ovens with screens on the door so you can glance at the contents without the limitations of glass windows”.

For Monterosa’s McDonnell, “wearable glasses of some sort will find a variety of specific uses; showcasing new cars before they’ve been manufactured for example”. However, he says, “I expect we’re a couple of generations from the killer AR or VR app.”

22. Do you think 4K/Ultra HD will be successful and why?

Despite earlier skepticism, most now believe that UHDTV will be a success, ultimately.

“I believe ‘yes’. Broadcasting and TV services are always developing and upgrading their services and utilising the latest technologies, so I think going UHD is inevitable. But UHDTV is just a means and tool for enhancing creativity,” says Keiya Motohashi, head, executive office, and senior strategist, UHDTV & Smart TV Services at the NexTV Forum, Japan.

“It will be successful, eventually, taking longer than TV makers would like to have you believe. Why? Unlike 3D or curved TVs, 4K fundamentally is just better TV – so just as all TVs eventually became HD TVs, all TVs that you can buy will eventually be – at least – 4K,” says Ovum’s principal analyst, TV, Paul Jackson. Content will increasingly be filmed in 4K ahead of devices and infrastructure becoming widely available.

“Yes, I most certainly believe that 4K will be successful. Simply because 4K offers better picture quality and that message resonates extremely well with consumers,” says Roku’s Shannon. “I also believe that streaming will be the primary platform for the delivery of 4K content to consumers. There are already 4K streaming services available.” Roku recently unveiled a 4K TV reference design and TCL will be its first technology partner, with Netflix being its initial 4K content partner.

“Evolution towards UHD is a natural development for TV, which always tends to provide better image quality and to improve the user experience with bigger screens. We could, therefore, reasonably guess that it will be successful overtime,” says Regis St Girons, who in addition to being CEO of HTTV is also a leading figure in promoting new formats as president of the HD Forum. However, given the average TV viewing distance in homes, only the largest available screens – over 80 inches – will provide “that true feeling and experience”, he says.

23. What challenges does 4K adoption face, and what needs to be done to overcome these?

4K and UHDTV do still face challenges.

“People in mature markets  are not going to rush out and buy a brand new 4K TV overnight – especially when the increase in perceived quality is less than the SD to HD shift,” says Ovum’s Paul Jackson. “Lower pricing of displays will help, though ironically this will mean the TV makers don’t get the boom years of margin some are – unrealistically – hoping for.” Growth markets including China could push adoption, while other devices, including smartphones and VR headsets, could take off earlier.

“I think the remarkable spread of internet technology will both challenge and support UHDTV,” says NexTV’s Motohashi. “Now many people enjoy various video content on their mobile devices anytime, anywhere, interactively. This is a most different situation from 25 years ago, when HDTV appeared. We have to consider how we manage broadcasting services in cooperation with the internet.”

St Girons meanwhile points out that “the industry is already working on a second Ultra HD generation referred as UHDTV1 phase 2 that not only provides more pixels but also better pixels”, delivering improvements that “are visible to the user regardless of the viewing distance and screen size”.

Shannon warns 4K has other implications for broadcasters: “Many traditional distributors may never upgrade their facilities to support 4K due to the bandwidth requirements. And don’t forget that the production cost for 4k content is a lot higher.”

24. Which industry players are best placed to deliver 4K/UHD?

“The OTT TV players certainly have the early advantage, given they rarely have to upgrade consumer hardware or pay for (much) infrastructure – Netflix and Amazon have been very smart in positioning their services as some of the only places that you can get 4K programmes, certainly up until Q4 2014,” says Ovum’s Jackson, who nevertheless argues that “the traditional service providers will fight back”. Physical formats like 4K DVDs will fail to take off, while smart TV manufacturers will push online 4K without reaping financial benefits, he says.

“Streaming services are clearly the ones to succeed in 4K delivery to consumers because they are the ones with a platform that is already technologically capable, together some satellite carriers,” agrees Shannon.

Motohashi believes that “broadcasting services and OTT/IPTV services are complementary to each other”. The position of terrestrial broadcasters is more complicated “because the terrestrial spectrum in Japan is too crowded”. But Japanese terrestrial TV broadcasters are those producing the video content. “So terrestrial TV broadcasters are expected to be main players as producers and suppliers of quality UHDTV content.”

For St Girons, “OTT platforms will have an advantage over more traditional broadcast networks as, on one hand, the production cost will be much lower for OTT content…and on the other hand OTT distribution costs will be proportional to user demand.”

25. How predominant will ‘quad-play’providers be in delivering TV services over the next few years?

Fixed-mobile convergence and quad-play offers are playing an increasingly prominent role in the strategy of many leading TV service providers.

“We believe the quad play is going to be an important factor in TV services going forward as service providers increasingly integrate to offer all services and use bundles to differentiate their offerings and provide more competitive packages. As more consumption is done on mobile devices, the importance of mobile in any television offering is increased,” says David Sandford of TiVo.

Modern Time Group’s Jens Nygaard-Andersen sounds a note of skepticism however. “Triple-play bundles are popular and increasing in penetration, whereas quad-play penetration is much lower and the availability varies a lot between regions and countries,” she says. While telcos are clearly pushing quad-play offerings. “there is no immediate need for a consumer to link the mobile subscription to the fixed subscription for technical or connectivity reasons,” says Nygaard-Andersen. “Most consumers are used to having different providers or bills coming from different companies, especially when it comes to mobile subscriptions. Thus, the consumer benefit of quad-play is less obvious than triple-play.”

26. What challenges do you think quad-play service bundles face in winning adoption?

The impact of quad-play – on take-up and pricing – has largely still to be felt. For TiVo’s Sandford, “choice and the quality of each component of the offering” will be crucial, with offers that limit choice or offer a poor experience likely to suffer.

Nygaard-Andersen’s scepticism about quad-play is founded on the lack of tangible benefits it seems to offer.

“For the customer it is all about the value proposition offered – why should I change subscription or put all eggs in one basket? The quad-play providers need to offer tangible benefits to the consumer in order to sell all four products in one package,” says Nygaard-Andersen.

27. With service providers delivering similar bundles, how will they differentiate their offerings?

With convergence becoming the rule, operators face a choice between competing on price and competing on value.

“A price discount is not a viable solution and also a dangerous long-term strategy for service providers,” says MTG’s Nygaard-Andersen, for whom “content is and will continue to be the differentiator”.

Sandford believes that “experience” will be key. “Optimising the consumer’s touch points with the provider are going to set the tone for how consumers respond,” she says.

28. Does the pay TV model of today have a finite lifespan? 

Pay TV providers are already taking advantages of the opportunities provided by OTT, whether as a defensive move or because they see money to be made.

“The pay TV industry has proven able to adapt over the last years to changing customer behaviours and new value chain dynamics,” says MTG’s Nygaard-Andersen. “We see an emergence of new players, services and business models. The value chain of OTT-delivered TV services as a major distribution form has offered major opportunities both to existing pay-TV operators and new players.” She cites MTG’s SVoD service Viaplay which sits alongside the company’s eight DTH satellite platforms, with growth of the latter fuelled by innovations like time-shifted TV and TV Everywhere. “This indicates that pay-TV operators are able to capture an increasing share of the total media spend,” She says.

“By that definition, the current model has a finite lifespan.  The question is when and how will it change,” says TiVo’s Sandford. Content availability for multiple applications will be key, but pay TV operators do have the advantage of offering a simple proposition.

29. Will there be more unbundling and greater subscription choice in the next few years? 

Unbundling and the emergence of à la carte options has been visible of late, notably in the Nordic markets.

“A clear trend is that the consumers are faced with an increasing number of content options, ranging all the way from premium to user-generated content,” says MTG’s Nygaard-Andersen. Consumers also have multiple ways to consume content and are increasingly turning to social media to guide them. Operators including MTG are responding by offering greater flexibility in terms of packages and options, which she believes will take the sting out of demand for a fully à la carte offering. “Consumers have never had more choice and flexibility than today, for instance we offer different packages, flexible packaging options and access to relevant content, both à la carte and unbundled,” she says. “Therefore I don’t see à la carte or a completely unbundled service as “the next big thing”, at least not for the average consumer. It is too complex for the normal consumer and the value of curation and social recommendation clearly outweighs the value of full flexibility.”

30. How significant will the revenue-earning potential of SVoD be relative to the overall pay TV pie over the next few years? 

The ongoing shift from linear viewing to on-demand is clear, but revenues from this sector are still relatively small.

“We believe that VoD will be an important factor going forward.  Between DVR and VoD, consumers will get used to having large content libraries at their fingertips.  As consumption in these forms grows, the revenue opportunity grows with it,” says TiVo’s Sandford.

“New technology has driven an increase in overall total media consumption as consumers now have access to an infinite range of content at their fingertips, making the pie much larger,” says MTG’s Nygaard-Andersen, who says her company’s Viaplay SVoD service enables it to reach a younger customer base than its DTH business. “At the same time, old habits die hard, and the majority of families still have and will continue to subscribe to a satellite or cable TV subscription, which provides the broader entertainment package catering to the whole family’s needs. So the key is that the total media consumption is expanding.”

This article first appeared in the February / March print issue of Digital TV Europe.