CHESEAUX, Switzerland & PHOENIX—Now in its fourth year, the Pay-TV Innovation Forum, organized by NAGRA and MTM, has released its global findings based off of industry executives in North America, Europe, Asia Pacific and Latin America. The Forum focused on a number of key industry trends, including OTT services, next-generation content aggregation, piracy and pay-TV digital transformation, among others.

On the surface it seems that pay-TV and OTT services are opposing entities, but a majority of industry executives that took part in the forum actually see OTT technology having a positive impact on their business. Seventy percent of those polled shared this view, while 21% see a negative impact. While new streaming services like Apple TV+ and Disney+ will soon be rolled out, they are not seen as a significant threat to pay-TV and can actually be an opportunity to adopt a super-aggregator model for these services. Super-aggregator platforms could emerge within the next five years, according to 77% of executives. However, combined services—like what Disney will offer with a bundle of Disney+, Hulu and ESPN+—could prove as a significant competitor.

However, pay-TV execs still recognize that certain things have to change in their industry to appease customers, and one such solution could be the restructuring of traditional pay-TV packages. Over the next decade, 91% of respondents believe innovation in product pricing and packaging will be key to attracting and retaining customers, especially the next generation of consumers.

One thing that they don’t expect to change, however, is the importance of keeping tier-one sports on pay-TV. OTT services are beginning to challenge pay-TV’s sports dominance with things like OTT aggregators and direct-to-consumer services from leagues, clubs and broadcasters. A total of 85% of respondents believe OTT sports streaming will increase in their country from by 2024. As a result, 93% see sport streaming services as valuable partners for pay-TV providers seeking to aggregate content and services.

Content piracy is still seen as a “challenge” to pay-TV businesses, according to 60% of the forum, with 65% believing that piracy has gotten worse or stayed the same in their countries, with nearly half believing piracy pressures will increase in the next five years. To combat piracy, the execs believe it will take a combination improvements to pay-TV offerings, deeper collaboration across the industry and new technology.

It was also widely believed among respondents (79%) that to compete, pay-TV will need to invest in areas like big data analytics, automation, artificial intelligence and machine learning. They mostly believe that they can be doing more to invest in these data and analytics capabilities.

“This year’s findings illustrate the ongoing need for transformation, as the pace of change across the industry accelerates. The wave of new OTT offerings entering the U.S. market are causing considerable anxiety, but the industry remains confident that it can continue to thrive,” said Jon Watts, managing partner for MTM. “Pay-TV providers will have to continue to innovate, developing better offerings and services that deliver what consumers are looking for. Faced with ever-growing competition, increasing fragmentation and fast-paced innovation, pay-TV businesses will have to decide which opportunities to pursue and which investments to prioritize.”

Find the full report here. 

CHESEAUX, Switzerland & PHOENIX—Senior executives of leading pay-TV providers, broadcasters, OTT services and rights holders are cautiously optimistic about the ability of pay-TV providers to adapt in an era of rapid changes, according to a report released this week.

The report, the U.S. edition of the “2019 Pay-TV Innovation Forum” from content protection and multiscreen TV solution provider NAGRA and international research and strategy consultancy MTM, examines insights gleaned from a seminar held earlier this summer in New York City.

“The 2019 U.S. edition of the ‘Pay-TV Innovation Forum’ showcases the massive opportunity available for industry players who can understand current market dynamics and implement the right strategies to remain competitive in today’s and tomorrow’s U.S. media and entertainment space,” said Simon Trudelle, senior director, product marketing at NAGRA.

During the seminar, the executives discussed the challenges, opportunities and priorities facing the U.S. pay-TV market.

According to the report, many of the executives are optimistic about the future commercial prospects for pay-TV in the U.S. However, some expressed caution stemming from anticipated growing pricing pressure, declining margins, fragmented distribution and greater competition.

The executives identified pay-TV providers’ main priority as re-addressing their role as aggregators and creating packages with greater appeal to younger customers.

The report also documents a mixed bag when it comes to how these executives view OTT services. Many see OTT as just another category of content to be aggregated and offered to pay-TV subscribers, while others view the availability of Disney+, priced competitively in a bundle with Hulu and ESPN+, as a possible existential threat to traditional pay-TV.

There was the notion among many seminar participants that some pay-TV packages may look like an increasingly good value to consumers when compared to the cost of subscribing to multiple direct-to-consumer (DTC) OTT services.

Many participants expect traditional pay-TV packages to be altered significantly. Fewer linear channels and a greater range of prices and packages are anticipated. These changes will require content providers to adapt their distribution strategies.

The executives also expressed their opinion that the industry is nearing the highpoint in content investment. There is a growing concern about the number of shows being produced.

Over the next few years, the highest priority of content providers will be transitioning to a more diverse distribution ecosystem. They must find a way to launch new DTC offerings to garner new revenue streams while protecting traditional, existing revenue sources.

The executives also agreed that connected platforms are creating opportunities for new entrants and aggregators. However, some believe streaming growth will slow in coming years as pay-TV providers reinvent their offerings and more streaming platforms launch. The result will be a fragmenting market.

Others see greater adoption of connected platforms as the genesis of a new wave of gatekeepers and aggregators.

Growing connectivity may prove to be a double-edged sword as it relates to content piracy, some argued. With more connected platforms may come greater focus from pirates on OTT services, some said.

“Most major U.S. companies are well advanced in developing their strategies, placing big bets on the future and rolling out new offerings—but there are lots of uncertainties ahead. The decade ahead promises to be a fascinating period for the industry,” said Jon Watts, managing partner at MTM.

A copy of the report is available online for download. Registration is required.