Pay-TV providers facing a perfect storm

Pay-TV providers in the Asia-Pacific region are seeing significant challenges from content piracy and low-cost OTT services – a perfect storm that is rocking their business model.

To fight back, they need to have a transformation plan that will be driven by innovation and the development of new business models.

Operators are now looking at diversified offerings and a more collaborative, unified approach to piracy as key priorities to deliver growth.

NAGRA, a Kudelski Group (SIX:KUD.S) company and the world’s leading independent provider of content protection and multiscreen television solutions, in partnership with MTM, international research and strategy consultancy, today revealed the latest findings from the Pay-TV Innovation Forum 2017 that looks into the Asia-Pacific pay-TV market.

The global research programme examines the state of pay-TV innovations and strategies that will drive the next phase of growth for the industry.

Service providers and content owners from the region participating in the Forum in May 2017, agreed that the Asia-Pacific pay-TV industry is entering a transitional period.

“Operators will need to adapt their business models and technology platforms in order to thrive in the changing environment.

“New offerings will have to reflect changing consumer demand for cheaper and more personalised content packages, including over the top (OTT) services, to effectively expand the range of services at different price points.

“Delivery infrastructure and technology platforms across APAC will also become much more IP-based, with content being increasingly delivered via both fixed-line and mobile broadband networks.

“This need for change is being driven both by the persistent threat of content piracy and the increasing popularity of OTT services that are using aggressive pricing strategies to acquire customers,” were the main focus.

Investing in the future
Despite these challenges, pay-TV providers in Asia Pacific are investing in the future.

They are continuing the steady roll-out of IP-connected set-top boxes (provided by 72% of providers in 2017, up from 66% in 2016), PVRs (63%, up from 56%), standalone OTT services (28%, up from 23%), and new adjacent services such as advanced advertising and Smart Home solutions (offered by 27%, up from 16%).

Industry experts highlighted two urgent investment priorities that will help service providers to navigate the transforming video and TV services market:

Concerted approach to tackling content piracy: to limit illegal access to content, operators are calling for content owners to take their own independent actions to monitor, track and stop the distribution of illegal content.

Development of more consumer-focused and diversified product portfolios by embracing new business models, operators can develop new packages and offerings that appeal to changing consumer tastes at a wider range of price points, including skinny bundles, personalised offerings, seamless multiscreen TV Everywhere services and smart home solutions.

NAGRA found two urgent investment priorities for service providers to navigate the transforming video and TV services industry: making a concerted effort to tackle content piracy, and developing consumer focused and diversified product portfolios. Operators are already investing in four key areas:

• IP-connected set-top boxes (provided by 72% of providers in 2017, up from 66% in 2016)
• PVRs (63%, up from 56%)
• standalone OTT services (28%, up from 23%)
• new adjacent services such as advanced advertising and Smart Home solutions (offered by 27%, up from 16%)