Consider this – nearly half of all millennials have never subscribed to Pay TV services. That alone is enough to suggest the TV industry is undergoing its most dramatic transformation since the dawn of cable TV.
But don’t count your traditional TV service provider out just yet. While these changes are significant, TV service providers have an opportunity to bring together the best of OTT with traditional Pay TV to create a television experience that meets the breadth of their viewers’ needs – from the digital natives who spend 53 percent of total video time watching on a multiscreen device (Ericsson ConsumerLab) to the ‘Baby Boomers’ that have witnessed television’s revolution from a black and white box to the ubiquitous sleek screens that surround us today.
Learning from the past
The speed of change in the new internet era of TV breeds uncertainty. As new and unexpected innovations and consumer trends emerge, the pressures associated with this evolution create unparalleled complexities, especially for video networks. The good news for the TV and media industry is that these dramatic shifts aren’t entirely new. Technology innovation and rapidly changing consumer expectations have driven radical change in the music, PC and video game market for years. With the rise of OTT and user-generated video platforms demonstrating similar patterns of adoption and infiltration,
TV can learn from the lessons of the past. Chief among these is the need for companies to act early and break from the traditional – often legacy – functions of the product or service that may now be holding them back. One case study to heed is Blockbuster’s failure to adapt to changing market trends when Netflix emerged. A slightly more positive case study concerns the rivalry between PCs and Gaming Consoles and their continuing evolution.
TV service providers must look at how customers’ expectations have changed: the offer of hundreds of channels through a Pay TV subscription could once give a significant competitive edge. Today, the same quantity of content can have a negative impact on a provider’s customer relationship: Ericsson’s 2015 TV and Media ConsumerLab Report found that ‘half of consumers watching linear TV say they can’t find anything to watch at least once a day.’
More is not always more when it comes to creating perceived value for the consumer and this is where personalization and improved content discovery plays a critically important role in determining a TV service provider’s longer-term prospects.
The key to survival: continuous innovation
In all the uncertainty, one thing is clear. In order to survive, all service providers must embrace new technologies at a much more rapid pace. Technology innovation is the key differentiator that will enable incumbent service providers to meet the expectations of a younger TV audience that has grown up with OTT services. Service providers must invest in fulfilling the expectations of TV anytime, anywhere and utilize the potential of the cloud to overcome the limitations of legacy technologies.
The value of receiving real-time or close to real-time analytics and adapting services accordingly; the ability to offer greater personalization and content recommendations to ultimately improve search and discovery: these are the types of capabilities made possible by modern web and cloud technologies that can enable TV service providers to create an immersive viewing experience that will help delight the consumer and maintain greater brand loyalty.
Delivering the TV of the future requires just as many cultural changes as it does technological shifts. The Pay TV industry has historically relied on waterfall software development techniques which typically result in one or two product releases a year. Compare this with consumer internet services like Amazon, Netflix, eBay and Google that are able to push out new features and functionality on an almost daily basis.
To compete with OTT services, TV service providers must start to operate like consumer internet companies, collaborating with industry partners, content providers and consumers to meet unique customer needs. To achieve this, service providers must embrace a strategy of continuous innovation made possible by agile development.
Investing in the future
While the growth in adoption of Cloud DVR and more robust TV Anywhere platforms signals the start of this shift, the battle for market share is only just beginning. All players should be investing in solutions that offer viewers a Pay TV experience that feels just as innovative and high tech as their interactions with other types of consumer technologies.
Service providers have a unique opportunity in this digital evolution to build on their inherent strengths while embracing new technologies to stay ahead of evolving customer expectations now and in the future. To avoid getting left behind, they must focus on building a network-quality service that brings together the breadth and depth of premium content that they currently excel at with the personalization, speed, flexibility and continuous innovation of OTT.
by Maria Cubeta
Maria Cubeta is head of Ericsson TV Platforms marketing communications, working closely with TV Platforms’ product management, engineering and the leadership team to craft compelling communications on Ericsson MediaFirst, Mediaroom, Mediaroom Reach, and Content Management System. Maria leads a team dedicated to creating communication strategies and implementing compelling external and internal communications and events that showcase Ericsson’s role in enabling TV service providers to provide their customers with highly engaging and innovative TV experiences that evolve with the consumer.
Prior to joining Ericsson, Maria worked in the venture capital industry leading marketing communications for Intel Capital, Intel’s global investment organization, in the US and Latin America. In this role, she worked closely with startup CEOs to advise on external communications.
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