“There is a real advantage in acquiring content in the bundle model because we have some predictability in the volumes we will deliver. It’s then easier to negotiate segregation with providers. Once we know what we can commit to, we can trade volume for wholesale discounts. It allows us to deliver value upstream to providers, who can count on a certain revenue, which in turn enables us to deliver value downstream, to our subscribers. It’s a win-win deal.”

Explaining consumer needs (and what Pay TV providers must deliver for them), Adam Nightingale, Chief Commercial Officer at 3SS, summarised it in one word: simplicity. “TV is entertainment, where you go to stay informed or to distract yourself, and it’s crucial to make it easy. Ironically, we build huge user experiences but we don’t want people to use them – we want to get viewers watching TV as quickly as possible.”

Nightingale also emphasised the importance of personalisation in a bid to appeal to younger users. “It’s important to understand what kind of user experience appeals to the individual, and make sure what they’re seeing on TV is relevant for them. There is no one size-fits-all.

“Aggregation is key, and non-traditional content sources, such as TikTok, YouTube or local content are all important; but making sure you have them in the right format, in front of people they most appeal to, is what matters. Then comes super-personalisation: understanding, monitoring and tweaking what works and what doesn’t. It’s a never-ending editorial task, but having the means to manage user experience at a fairly granular level will be increasingly important if you want to remain relevant.”

Nancy Goldberg, EVP and Chief Marketing and Sales Officer at NAGRA Kudelski Group, also pointed to the power of personalisation, including as a way to combat the attraction of pirate services. “Piracy means users can find content easily for free, so keeping them [consumers, on Pay TV] will be harder. We must give them added flexibility, value, experience. There can’t just be one thing everybody wants; it must be hyper-personalised. The adage, give them what they want, whenever they want, couldn’t be truer today.”

Andy Waltenspiel, Managing Director, Waltenspiel Management Consulting, moderated the Connected TV World Summit panel, ‘Pay TV in the 2020s – keeping subscribers and channels onboard’. You can see the discussion here.

According to Jonas Engwall, CEO of Bedrock (which provides video streaming platforms to broadcasters and media companies in Europe), the answer is simple. “Content is still king in the streaming world. But the platform is queen.”

He continued that while there are exceptions, “If you look at the global streamers, they are well ahead of the local players. They are quite advanced in their content offering, massively pushing content with the platforms. And I think from a platform perspective, they’re also very advanced. They provide very personalised platforms, they’re stable, they work well.”

Ivars Lubāns, Head of Product at Go3, a local streaming provider in the Baltics (and part of TV3 Group), pointed out that the key to growth for this service was providing variety and locally-focussed content. “Regarding the Baltics, it’s a small market and Netflix is probably not that interested [in providing local content], as it’s three separate countries, three separate languages. So, we have the local knowledge and the local understanding and relevance, which is especially important for the 25+ [demographic] market.”

This was echoed by Anita Barnard, Head of Distribution and Commercial Partnerships at Marquee TV, which offers ballet theatre and opera, and whose service focuses on “content from places where people cannot or cannot afford to go to, such as the Sydney Opera House”. However, Engwall asserted that, “Local players are great at storytelling. But the challenge is to bring that content on a platform that can compete with the big players.”

The panel agreed that consolidation and partnerships could be a key differentiator for driving growth in D2C platforms. But more than that, without consolidation the CTV landscape will become too fractured for consumers. “Consolidation is the future,” said Parul Goel, Territory Head UK and Director Finance, UK/EU/Americas at ZEE Entertainment. “It’s got to happen because there is so much leaking of money everywhere. And we have to stop it to grow our industry. Otherwise, there will be hundreds of channels people won’t watch.”

Marquee TV works with local and global providers to bring its content to wider audiences and provide a better viewing experience, and Barnard sees a customer experience opportunity in this marketplace. “From a consumer point of view, there’s so many different subscriptions in their life and they just want to manage that in one place. Consolidation doesn’t have to be companies buying companies, but it needs cooperation to find an easier way for consumers to manage their subscriptions.”

Lubāns agreed on the need to evolve the CX. “[For consumers] one part is the money and the other is the experience. If you have to switch between providers to watch different content, it’s inconvenient. Some kind of aggregation has to happen within the industry.”

With the current economic situation, it can be hard to justify the investments needed to grow – and the days of growth at all costs may be coming to an end. “For global players it’s a land grab race. They are creating lots of content, but at some point they will have to stabilise to make a profit,” asserted Engwall. From Goel’s point of view, “Cost control in terms of content is the quickest way to get profit.”

With a plethora of ways to monetise content – whether using AVOD, FAST or SVOD – D2C providers should not be afraid to experiment with different strategies. As Engwall explained, “Nowadays, technology allows you to have a broader monetisation strategy; I think it’s up to everyone to try and see how it ends up … Spotify has shown in music that people will pay eventually to get a better experience. I think we’re heading in that direction.”

Ultimately, the panel decided, the key to growth in this sector is putting user experience first. “We want viewers to have a good experience on the bigger screens. Those who do watch via those bigger screens tend to stay longer,” Barnard observed. Lubāns concluded: “Going forward, I think the industry will focus not on the quantity, but on the quality of the content.”

The panel was moderated by Lydia Fairfax, Founder & MD at Triple Crown Consulting.

“As a user myself, I still sometimes end up in the situation where on a Saturday evening, I can’t find anything to watch,” Brigita Brjuhhanov, TV Product Owner at Elisa Estonia, told  Connected TV World Summit two weeks ago. “And that shouldn’t happen. We should never have to search for half an hour, or an hour, to find what we want to watch.” She added: “It’s our responsibility to have happy eyeballs in front of the TV and not the ones feeling frustrated.”

While it may be tempting to blame discovery on the viewer and their indecisiveness, the panel firmly asserted that it was the role of content and service  providers to make discovery as painless as possible. And this starts with ensuring that platforms are optimised for every device and environment.

“The reality is that we need to be where the eyeballs are to make our business models work. So, we can’t assume everyone has a particular device. It’s about understanding that the consumer probably isn’t going to change their input source,” Gary Woolf, EVP Strategic Development at All3Media International, explained.

Even once a user is on a platform, the sheer volume of content can be hard to negotiate. “There’s an abundance of content and greater choice creates a challenge,” said Matthias Puschmann, TV Platform Partnerships EMEA at Google. “Our first priority is making the content available or helping our partners to provide the content to users, but then also putting them in position to understand what’s happening on a user’s device, and then presenting the content in a way that resonates.”

Platforms have always looked to keep users engaged by delivering recommendations, and while “curated recommendations are still relevant” according to Brjuhhanov, providers cannot rest on their laurels and must ‘be bold’ with creating recommendation engines. But if these backfire “you can lose the audience’s trust,” she asserted.

A key part of being able to recommend content, and making it searchable, is having complete and accurate metadata. “A problem we have as an industry is one of legacy,” said Woolf. He described the issues he had recently when bringing an old TV series  onto a streaming platform: “Not only are you cleaning up these episodes and getting them digitised, but the level of metadata that was recorded 40 years ago is nowhere near what is required. So immediately you need an army of people to create this metadata.”

Brjuhhanov agreed, stating that this issue also affects content in lesser used languages. “Having a ‘smaller’ language, and creating the metadata for that, I think it’s a challenge. And we don’t have an easy solution for that.”

Every provider wants their content to be discovered easily by all viewers. But at the end of the day, as Brjuhhanov pointed out, “We all want to be a button on the remote, but in the end we’ll run out of buttons.” Woolf pointed towards FAST (free ad-supported linear streaming channels) as an emerging way to offer consumers a different service in order to stand out. “Sometimes people just want to come home and have content on, and not have their TV ask them what to put on. This is where FAST has developed.”

However, according to Brjuhhanov, grabbing and keeping the attention of customers comes down to content, “and when we talk about what content should be prioritised, it should be what the customer wants to watch. We need to put egos aside.”

The panel was moderated by Bernd Riefler, Founder & CEO at veed analytics.

Saturation and price sensitivity

During the Future of TV Advertising Global in December, the research company Ampere Analysis outlined what it means for the industry as SVOD majors move into ad-funded tiers. Taking Netflix as an example, Richard Broughton, Research Director at Ampere Analysis, highlighted that global subscriber base growth year-on-year (YoY) dropped from 30% in 2015 to 4% in 2022 — a trend that is being witnessed by many video streaming services.

While increasing levels of competition continue to shape the market, one of the main factors influencing this shift, Broughton explains, is price. “When we look at sign-up and cancellation patterns among different subscriber bases, the main driver is price […] we found that the people who were leaving weren’t necessarily going to competitors, they were just looking at the price and thinking ‘that’s a bit steep, I can’t afford that’.”

Enter the ‘basic’ account’, a response to both consumer and business needs. But what does this mean for marketers? “The ad-tier is available to markets representing 70% of the global subscriber base,” noted Broughton, pointing out that “these are the larger, wealthier markets that Netflix operates in” – a good sign, from an advertising perspective.

Although the general level of discount is roughly $2-3 in most markets, there are differences between tiers that correspond with local levels of ad sensitivity: “If you’re in markets where consumers are more ad-tolerant, like Brazil, you get a lower discount – conversely in markets like Germany and Australia, where we see high levels of ad resistance, there’s a bigger incentive to take the basic tier.”

Unlocking new audiences

In general, the ad load is to be kept low, at 4-5  minutes per hour. While this may not seem like much compared to some broadcast TV ad loads, there’s no doubt advertisers will still be excited at the prospect of working with Netflix, especially considering the streaming giant has now unlocked a pool of consumers which, according to Broughton’s estimates, equates to “up to 34 million homes and 80 million people, or about 15% of subscribers”.

Since these audiences can be quite hard to reach via traditional media, this presents new opportunities for advertisers across the board, who now have the option to integrate ad-tiered SVOD into their media mix.

A path to sustained growth

Netflix’s turn to an ad-funded model — soon to be followed by Disney+ — marks the beginning of a shift in SVOD consumption. While global lockdowns drove a surge in TV screen time and streaming in the UK and beyond, there is now a fierce battle for attention against a backdrop of tighter household budgets.

Providing more affordable plans for viewers while keeping ad-load down is how streaming platforms such as Netflix reckon they can maintain revenue growth, driving their appeal to advertisers and consumers alike.

“ITV has managed to create a direct link from data to profitability and sustainability, not just for the organisation, but for its partners,” said Izlan. “We use value as a means for prioritisation among many data use cases, as a method for feedback and learning, and as a way to measure success.”

Many areas of the business are said to be improving their use of data: ITV’s own marketing campaign performance, increasing the choice and speed to market of new addressable advertising products, and the empowerment of product experimentation to drive viewer engagement.

Izlan, however, was excited for the next frontier: “We are using data as the connective tissue between all the various touchpoints, or as I like to call it, the ‘viewer value chain’. This means we can start informing and optimising the decisions we make in a much more interconnected way, so we can grow our streaming business. An example of this is data driving content positioning. It enables optimisation and experimentation, and we link that to marketing activity — so how we use data to attract new users as well as re-engaging audiences with first-party data activations across all marketing channels.

“We then link that to the product experience. By using data to personalise experiences on ITVX, we’re giving viewers what they want to see, we’re telling them what they might like to watch next, and driving engagement and time spent on the site. That, in turn, increases the advertising capacity, which we then link to commercial opportunities. It’s how we drive reach, and how we drive more addressable advertising options for advertisers.”

By incorporating everything that Izlan mentioned, ITV has created a feedback loop mechanism to continually optimise its decision making and grow its streaming business.

“It’s been a journey to get here. Over the last 18 months we’ve kept our procurement team busy. We’ve implemented a new cloud data platform, clean room technology, and a customer data platform. All that is coming together to power Flex, ITV’s first data-driven platform that offers insights and the activation of data, ” Izlan revealed.

She also told the London audience that by introducing these new ventures, ITV has recognised that digital transformation is not only about the technology. “It’s also about people and process”, she said. “We knew we needed an enterprise-wide cultural shift for this to deliver the value we want for the business. So, in parallel, the data team is transforming the operating model by moving away from centralised, back-office style data functions to a fully decentralised model where we are embedding data capabilities into the business. These align with each business area’s way of working and strategic objectives.

“We’re allowing our users to self-serve by building data, training that data, then releasing it. We want to democratise data across the business, so the data activation team sits in the same place as the business positions at all levels of the organisation. ITV knows that developing data capabilities and culture are powerful drivers of value. It also makes advertising better for end consumers and a more profitable and strategic investment for brands wanting more enduring business outcomes.”

You can read the full story at our sister publication, The Media Leader, here.

Reinvention was the key theme of a 2022 Connected TV World Summit panel which brought together a range of experts – from operators (KPN and TalkTalk), technology and app providers (Comcast), and content owners (Horse and Country) to discuss the future of Pay TV operators.

From Pay TV aggregator to super-aggregator

According to Alejandro Casal Gómez, Product Owner of STB Embedded Software & Apps, KPN, there are three tried and tested ways operators remain relevant today. The first is through their pre-existing footprint that can extend reach “to millions of eyeballs”; the second is by offering easy-to-use bundles that provide consumers with a “clear overview of the services they are subscribed to”, and the third is through the “durable relationship” they have with their customer base. He also pointed out that operators are not selling a device but a service.

Asanga Gunatillaka was Commercial & Group Product Director of TalkTalk until July and provided his insights before leaving this role. TalkTalk recently moved away from its role as a “traditional Pay TV aggregator to a super-aggregator” – furthered this point by explaining how they were responding to an increased need for flexibility and simplicity.

Contextualising the situation of consumers today, Gunatillaka noted that “increasingly, customers are looking to save money – particularly in these challenging times – which is an opportunity to be an aggregator of a variety of video services. We make it easy to discover new content, switch between providers, [as well as] getting the Wi-Fi right into the home.”

No matter where  in the industry you stand, it seems like operators do still have an important role to play in the current media mix. Heather Killen, Chairman and CEO of Horse & Country, said even though as a content provider they had pivoted towards a multiplatform model – two linear channels, a premium channel, as well as online, on-demand content – Pay TV was still “a good part of the revenue mix and a good part of the customer funnel”.

While superfans and subscribers made up two-thirds of their revenue, the wider reach TV affords – drawing in a larger audience who wouldn’t have otherwise come across their content – was still relevant.

Industry challenges: technology, ease of access, and the d-word 

That said, one of the main challenges for super-aggregators involves unifying this experience. “How do you integrate that into a seamless process?” asked Thijs Bijleveld, Executive Director, Head of Business Development & Account Management EMEA, at Metrological, a Comcast Company.

“We need to create a framework for both content operators and content providers,” he explained, adding that within most households, the ideal was “a personalised screen, one remote, one bill, one personalised UI – and if you want to put everything behind one remote, you’re going to have to make some bold decisions to do that.”

Of course, any discussion about media, content, and consumers today could not miss out on the d-word: data.

Killen pointed out that when it comes to using apps, or any kind of platform that is not a D2C experience, “there’s a trade-off where you’re giving up margin and control over your and your customers’ data, particularly if it is an in-app purchase”. Consumer insights, she added, are incredibly valuable when it comes to understanding and engaging with their user base, as well as helping to identify people who are a churn risk.

Indeed, any possibility “to facilitate some degree of transparency or engagement with the audience on behalf of the provider” would be greatly beneficial to everyone: “The consumer, the content provider, and then with increasing engagement, the operator partner as well.”

Extending the life cycle of devices and media takes constant reinvention, while at the same time recognising the great variety of ways consumers use different devices and technology.

Set-top boxes appeal to certain cohorts, while other consumers will be happy to bring their own device. And while Gunatillaka considers the set-top box a relevant element within “the connected ecosystem”, there is no “one-size-fits-all solution”: something all players, whether content provider, operator, or technology platform, are having to understand.

These key themes were echoed in two sessions at the event: first in a discussion with Matt Jones, Chairman & President of COVESA and Director of Global Technology Strategy at Ford Motor Company, and then in a panel discussion featuring Pierre Donath, Chief Product Officer and Chief Marketing Officer at 3SS, Robert Dube, Head of Product TOGGO at Super RTL, and Amanda Phillips, Regional Client Lead Europe at WPP | Ford. Dr Bernd Riefler, Founder and CEO, veed analytics, chaired the discussion.

Though the idea of sitting back and watching TV in a car may seem a long way off for most people, the space is ready to explode, and there is an abundance of in-vehicle entertainment systems already in existence. “There are many new car brands coming to the market and they have to come up with a clear differentiation,” Donath expanded. “And I think they are looking towards entertainment as one differentiator.”

Phillips agreed, noting how car manufacturers are looking beyond selling “just metal, and instead thinking about a whole user experience”. But some panellists were concerned that this could lead to further market fragmentation which could negatively affect user experience. “It’s a new cake, and everyone wants a piece of that cake,” Dube said. “But the problem is that many companies don’t look from a user perspective. They see the new business opportunity and go for it, and then the product does not serve user needs. I really fear that customers will face some issues within the next ten years.”

As part of COVESA – the Connected Vehicle Systems Alliance – Ford’s Jones is at the forefront of creating standardisation in the sector, and he said collaboration between both traditional OEMs, new vehicle manufacturers and tech companies can help create a high-quality universal entertainment user experience. “We need content aggregators, content producers, the people that understand how to create a compelling set of interactions and user experiences participating actively within COVESA.”

On the subject of content, Phillips speculated that automotive companies will look towards local providers, especially as they build out content that fits around the specific setting of the car. “This is a revolution of dead time,” she asserted. “​​If you have either ten minutes or 20 minutes available, it would be great if we could actually select content based on that. So, there’s an opportunity to really look at content, both the partnerships, and also curation and creation … for specific use cases.”

Dube agreed that specialised content types could be created for a car setting and that access to the unique data points within vehicles can help content creators to tailor their output for this new environment.

Donath added: “The car has unique data like speed of drive, time until destination is reached, and these can be used to personalise or adapt the experience. So, if I am taking a journey for five hours, I will get a completely different set of recommendations than if I was just taking a 10-minute trip to the office. This is something that is very unique.”

Advertisers can also take advantage of these new inputs, creating something that is palatable and satisfying rather than distracting, Phillips stated.

With 1.5 billion cars on the roads, the opportunity is there for in-car entertainment to elevate the car to a second living room, but all panellists agreed that user experience must be seamless and effective if it is to become, as Phillips put it, “an extension of our life”.

“My argument would be that there is a place for companies that have local billing relationships, understand what the local market looks like and have linear content from that market,” said Morrod. Speaking at Connected TV World Summit last month, he gave three top tips for smaller operators to stand out in this crowded field.

Get your head in the cloud 

Historically, bigger operators were better able to differentiate themselves from others because they could afford more sophisticated technology for content distribution. The development of cloud technology has changed this.

“Cloud makes everything cheaper,” Morrod explained. “If you go to cloud-based technologies, like transcoding, for example, or just putting the content workflow or asset management into cloud-based services and providers, then it scales much better.”

In turn, this improves the user experience, because consumer-facing, front-end deliverables are all facilitated by standardised operating systems, allowing for better personalisation and ad insertion. This helps smaller Pay TV operators compete with TV giants by producing higher quality systems more affordably.

Use apps to aggregate content  

Accumulating content doesn’t have to break the bank, either. Morrod argued that smaller Pay TV operators have the potential to be super-aggregators — they just need to harness the right, affordable, technology. “Super-aggregators are basically the same as regular aggregators, but they use apps rather than linear channels,” he explained. He recommended using a standardised operating system (OS) platform with an app store to achieve this, like Android TV’s Operator Tier or a reference design kit (RDK). “Use technology providers that are multi-tenanted because it’s cheaper,” he said.

Don’t abandon linear content 

Finally, while streaming giants like Netflix and Amazon have established market dominance in SVOD, there’s still a place for linear TV. “There’s a huge demographic that prefers linear,” according to Morrod, and it’s a valuable segment that operators shouldn’t take for granted. He argued that local providers have an edge over the OTT-only providers: through sophisticated interfaces, they can mix linear and [linear channel] catch-up with on-demand content and gain valuable data that enables them to reach wider demographics in their local market.

“The benefits of being a smaller local Pay TV operator are actually pretty meaningful,” Morrod commented. “As a small provider, you know your local market… and all of those big companies that have great content on their apps, they actually need local providers because they need trusted brands.”

In Morrod’s opinion, by implementing these solutions, smaller operators can enjoy the innovation that would come from a larger development team but at a fraction of the cost, particularly with cloud technology. Aggregation through apps will also improve the user experience and means that smaller Pay TV operators won’t have to keep licensing expensive new content.

How the F1TV Pro app super-serves its hardcore fans

Formula 1 is currently enjoying a renaissance, with Netflix’s hit Drive to Survive documentary and a robust F1TV Pro app driving engagement among audiences – even in North America where interest in the sport typically trails behind Europe. So, how has Formula 1 used its OTT offering to maximise reach?

The F1TV Pro app supplements, rather than cannibalises, the existing broadcast experience, Ashwin Desai explained. “F1’s quite a unique sport in that broadcasters have the world feed — a fully-produced feed by F1 that showcases the relevant action from an overall championship standpoint. At the same time though, there are many other drivers on the grid and on the track. Most action will be to two or three cars, but there are another 17 there that have their own team and driver followings.

“The F1TV Pro app allows you to follow any of those drivers. It has onboard cams from all 20 drivers, it has a data feed, a new pit lane channel, it has various additional commentary feeds in different languages… It gives you access to all the telemetry that’s within the live timing app that we’ve had on the market for a long time. It really super-serves the fans, both from a primary screen perspective but also, with the tie-in product, with the second screen experience.”

Converting consumers of pirated content into paying customers

Piracy costs the sports industry $28 billion a year in convertible value. Simon Brydon (Synamedia) argued that to win back this lost audience, rights holders need to understand that viewers of pirated content are consumers like any other, who are sensitive to price and convenience. They are not averse to paying for content ­– Brydon noted that 74% also pay to subscribe to a legal service.

Speaking about the pirates themselves, Brydon said: “It’s extremely easy to steal [OTT] content. These professional criminals will aggregate everything: the entire works of live sport, Hollywood studios, Netflix, everything — and they’re just offering a replacement service… With so much pressure on the wallet and the multitude of services you need to buy, if you can get everything ever made in the world, live, VOD, etc., for £10 a month, it’s a really attractive proposition.”

Price and fragmentation aren’t the only factors driving consumers to purchase pirated content. In many regions, known as “dark markets”, consumers simply aren’t served any legal content and have no other way to access it. Brydon urged rights owners to improve their distribution models to fill these gaps, otherwise these sophisticated piracy networks will continue to profit. It’s these networks that need to be targeted, rather than implementing digital rights management (DRM) that inconveniences legitimate users.

“If you make it really hard [to steal content], you drive up the cost of delivering and you drive up the inconvenience, and you can drive certain businesses out of business because as the cost of aggregating it goes up, the cost of distributing by the pirate goes up and resellers will drop out of the market because it gets too expensive. If you do it properly, the pirate consumer does buy legal content.”

Deliver on UX to keep fans engaged on OTT apps

In a marketplace that becomes more crowded each year, OTT apps need to find ways to differentiate themselves from the competition. One crucial aspect is the user experience, as consumers will quickly bounce off a platform that is inconvenient or, worse, non-functional. Joe Nilsson explained what approach SportsTribal — as a new AVOD sports platform — takes towards delivering an elegant user experience.

“The bar is set pretty high by a lot of the other people in the OTT space. People have an expectation set by Netflix for a user experience,” Nilsson commented. “So, that’s the Gold Standard in the industry, if you can get to that. There are others that are not that. We’re en-route — a classic startup — we have to start somewhere, and we started with the most critical pieces of our product.”

Once the video player itself was up and running, SportsTribal’s next step was keeping the content coming, especially for sports programming which fans will often have playing continuously in the background of their day-to-day life. “It’s extending that user journey and making sure that when they fall out of that sports piece, and they stopped watching, they fall into something that extends that watch time, making that journey seamless.”