The innovation imperative in IPTV

Published on 12/09/2018

Category: Innovation

For more than 70 years, the cable and Pay-TV model has been remarkably successful for audiences and operators alike. Now, however, the entire TV industry is in a state of tremendous disruption.

For viewers that’s exciting. For operators it’s unnerving.

What if there were ways to reduce the more unnerving elements of our current disruption without losing out on the excitement?

There are. Operators are looking ahead to next-generation IP-based set-top boxes that support voice control and search, personalization, and third-party applications.

But beyond the features themselves, Pay-TV operators must first accept that disruptive innovation is a constant in the history of television.

Innovation is the connective tissue between content producers, operators, and viewers. As the technology of transmission evolved from over-the-air to cable to satellite, and image quality evolved from grainy black and white to color to razor sharp 4K, each new disruption gave broadcasters and later – cable companies and Pay-TV operators – new offerings with which to build audiences and profitable operations.

The viewer takes control

The Internet, however, is upending much of what came before. In less than a decade, it has disrupted not only the technology of television distribution; it has wreaked havoc on what was thought to be an unbreakable business model.

As has been the case in retail, banking, and numerous other industries, the Internet has upended the relationship between provider and consumer. Now, viewers are in charge. No longer beholden to the confines of linear programming, cable distribution, or even a fixed screen, they now control nearly every aspect of their TV experience.

Viewers now expect to receive their favorite live and on-demand programming wherever, whenever, and however they want. While in previous decades operators needed concern themselves only with fixed screens, modern viewers expect seamless viewing experiences across fixed screens, laptops, and mobile displays. Compounding the complexity is the possibility that every viewer’s habits will be utterly unique.

New expectations push down profits

The television viewer of 2018 is more loyal to content than to those who provide it, reluctant to sign long-term contracts, and willing to pay only for they want. Further, they’ll switch to an operator who can deliver that capability as easily as they once changed the channel on their remote – sometimes with as little thought.

And while cable and Pay-TV operators must invest heavily in network maintenance and upgrades to keep the signals flowing, new OTT providers have no such concerns. They can simply distribute their content directly to viewers through the public Internet at next to no cost.

All of these trends pose serious and existential threats to the health of your business.

To none of these trends is the proper response to do nothing.

Industry leaders take notice

Fortunately, the majority of cable operators and Pay-TV providers have awoken to these challenges and acknowledged the need for change. In a new report by NAGRA/Kudelski and MTM, for example:

  • 82 percent of Pay-TV executives expect competition from other pay TV companies, telco and OTT service providers to increase over the next five years
  • 55 percent of Pay-TV executive surveyed say they are revising their expectations for future growth
  • 20 percent believe revenues to decline over the next five years, up from a mere 8 percent last year.1

Equally encouraging is that executives see innovation as the means to cope with disruption. For example: 85 percent of them agree that to grow, they will need to innovate strongly over the next five years, up from 78 percent in 2016; further, 61 percent of companies have improved their portfolios with new products or features in the last 12 months.2

A promising start, but a long way to go

These figures are promising, but they’re only a start. Innovation remains unevenly distributed between a small group of well-funded national leaders and many smaller regional followers3. And the majority of executives surveyed report feeling held back from innovating, whether by upgrade costs (74 percent), a lack of fit-for-purpose technology and culture (51 percent), or by a corporate aversion to risk (51 percent).4

For Pay-TV operators, innovation is the only way forward

Valid though these are, the reality is that Internet-led disruption will affect all operators, regardless of budget, culture, or appetite for risk. The fact is, the current state of affairs is untenable. Innovation is the only way forward.

If you’re ready to innovate now, contact us to request a demo of our Elevate Cloud IPTV platform or call Ken Brazile at 1-888-4-ESPIAL.

1 NAGRA/Kudelski Group & MTM, The Global Pay-TV Innovation Landscape: Industry Perspectives on a Year of Change, September 2017.
2 ibid.
3 ibid.
4 ibid.
Image by Tina Rataj-Berard via https://unsplash.com/@t_rat_max
Jaison Dolvane
CEO at Espial
Jaison Dolvane
CEO at Espial

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