M+E Daily

Diversifying consumer video offerings, better leveraging consumer data, combating streaming piracy, and more infrastructure investments are among the pay TV challenges weighing on the minds of industry executives, according to a new study from content protection and multiscreen television solutions NAGRA and research firm MTM.

NAGRA’s third annual North American Pay TV Innovation Forum found that pricing pressures from consumers and subscriber losses for traditional pay TV services continue to accelerate, and in order for the pay TV industry to adapt, skinny bundles and SVOD services are showing the way.

“While the North American pay TV industry is experiencing a challenging transitional period with barriers to entry falling and competition growing, it remains the most innovative in the world,” said Simon Trudelle, senior director of product marketing for NAGRA. “This is why industry executives are optimistic about their ability to remain competitive and grow overall revenues through a more diverse product and service offering, with pay TV at the core of this success.”

While MVPDs are shifting from selling huge channel bundles to offering, multiple smaller content packages — such as skinny bundles and direct-to-consumer services — virtual MVPD offerings yield low margins and contractual agreements with content owners still need to be adapted to offer that flexibility, the report found.

Making better use of advanced advertising services is another pay TV focus among executives, with MVPDs exploring new partnerships with cable networks, in order to sell a higher share of ad inventory available on MVPD platforms, leveraging direct access to customers and that data to offer addressable TV advertising.

And speaking of data, advanced analytics and artificial intelligence (AI) are both important investment areas and open up opportunities to improve operations, executives said. Advanced analytics and AI can help pay TV providers deliver more relevant advertising and personalize content recommendations.

Rolling out fiber and 5G networks and transitioning to IP-based technology were also named as a priority in the infrastructure space, while some participants pointed to the need to crack down on streaming piracy, which has become more prevalent in the age of IP-based content distribution.

“Despite the challenges and disruption facing the US industry, pay TV providers in the region are taking significant steps to adapt to the new competitive landscape,” said Jon Watts, managing partner with MTM. “There is a long way to go and some important challenges still to resolve, such as strengthening the economics of the new virtual MVPD services and unlocking the wider potential of advanced advertising and addressability. However, these issues are clearly front of mind for many US executives – and there are encouraging signs of a growing willingness to collaborate and partner across the industry.”