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Pay TV providers finding new ways to monetize costly content acquisition

The results reveal that globally, TV content consumption preferences are rapidly trending away from linear TV programming towards Video on Demand.

IMAGE FROM PIXABAY.COM

Amdocs, a provider of software and services to communications and media companies, announced the findings of a new global survey of the world’s leading 17 Pay TV providers, representing over 100 million active subscribers. The results reveal that globally, TV content consumption preferences are rapidly trending away from linear TV programming towards Video on Demand.

IMAGE FROM PIXABAY.COM

The survey, which was conducted by Kagan, a media research group within S&P Global Market Intelligence, further finds that Pay TV providers are increasingly partnering with third-party content providers to explore and implement new revenue generations models, such as revenue share with content owners and pay-per-use mobile access to non-subscribers.

The survey reveals that Pay TV providers globally are being challenged by OTT on-demand video content providers. The same trend can be seen in the Philippines, where many on-demand video content providers such as Netflix, iFlix and HOOQ have partnered with local telcos to offer entertainment services. A recent Nielsen Global Video-on-Demand (VOD) Survey further affirms this, saying that 81 percent of Filipino respondents subscribe to an online video service provider and 85 percent said they prefer to watch VOD during their most convenient times.

Pay TV providers are recognizing this market trend and responding by searching for ways to expand their offerings and generate revenue from non-subscribers, such as via ad-supported OTT services or by offering pay-per-use content on mobile devices. This is all part of a strategy of preparing for the inevitable changes that will take place over the coming five years. Those who have not yet responded to this trend will need to do so quickly to remain relevant. 

The respondents of this survey included 6 Pay TV providers from EMEA, 5 from North America and 3 each from APAC and CALA. 

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Key findings include:

The shift from linear to on-demand content will continue to be a top trend over the next 3-5 years: 82 percent of respondents acknowledged that consumers are increasingly expressing a preference for on-demand content, and they believed that this trend would be more pronounced in the next 3-5 years. This is due to the disruption of the traditional broadcast TV business model by the rise of over-the-top (OTT) players, increased video-on-demand content, as well as multi-screen and TV everywhere technologies. 

Revenues to be increasingly driven by targeted ads, revenue share with content owners and pay-per-use mobile access to non-subscribers: As subscription fees become insufficient to support new content consumption, 65 percent of respondents said that in the next 3-5 years, targeted ads will be a key revenue driver. In addition, while a similar number already have a revenue-sharing model in place with content providers, this figure will increase by 18 percent by 2018. At the same time, 29 percent currently provide pay-per-use mobile access to non-subscribers, a figure which will increase by 29 percent more by 2018 and another 29 percent by 2019. This trend indicates that attracting non-subscribers through mobile pay-per-use access will be key to Pay TV providers’ strategies.

Deployment and service offering challenges: Besides content acquisition costs (70%) and competition with other video providers (59%), platform interoperability and integrating with existing platforms represent the most critical deployment challenges (53%). At the same time, over 70 percent cited customer satisfaction and supporting new customer acquisition as the biggest challenges of on-demand video service offerings. 

Critical factors for growing and retaining the subscriber base: Quality of experience and developing interactive applications represented the most important factors for increasing subscriber numbers (65%). In addition, almost half of respondents said that bundling OTT content with core products and offering a partner’s OTT service on multiple screens are critical to attracting and retaining subscribers (47%).

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Spending priorities of service providers in the next two years: Application development, which is seen as vital to the user experience of the future, will be the greatest spending priority (56%), closely followed by developing an online video platform (OVP) with flexible monetization and payment capabilities (42%).

“TV content viewing no longer takes place on TV screens alone. People across the globe are consuming on-demand content on the devices of their choice, and they demand more personalized experiences,” said Daniela Perlmutter, head of product and solution marketing, at Amdocs. “Pay TV providers who recognize the changing consumer behavior trend need to invest more in solutions that allow them to quickly onboard and integrate partners, as well as offer premium personalized OTT video services, while efficiently monetizing new revenue opportunities and earning the loyalty of high-value customers.”

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