Netflix has been on a roll recently, with their strong television offerings bringing more customers than predicted in the second quarter of the year. Source: Shutterstock

Innovation and consumers must be top priorities for PayTV industry – NAGRA

THE traditional TV industry is changing so rapidly it has been giving leaders in the field a whiplash. The way people watch television is shifting towards desktop and mobile screens, especially with the proliferation of subscription-video-on-demand (SVOD) and over-the-top (OTT) content providers such as Netflix, Amazon Prime Video, YouTube and iflix.

In Singapore, for example, more people own smartphones than TVs and the gap between TV and smartphone ownership in other SEA countries is narrowing, according to a report by Google. Across the pond towards the West, desktops are the screen of choice among Americans and British viewers.

Traditional TV-watching is also becoming a lesser activity among millennials –  a report by Nielsen in the fourth quarter of 2016 found 18 to 24-year-olds spent 39 percent less time in front of the TV compared to 2011, while 25 to 34-year-olds spent 26.5 percent less time. Comparatively, TV-watching among 50 to 64-year-olds increased by 1.6 percent, going up a further seven percent among those aged above 65.

So the figures add up and they paint a damning portrait of the PayTV landscape falling behind – but is there still a way for the industry to catch up? Stephane Le Dreau, Southeast Asia general manager for NAGRA – a global provider of PayTV solutions – believes the trend of traditional broadcasters moving to IP services will help them reposition themselves.

Le Dreau says being able to watch on multiple screens has become a natural part of the viewing experience. Source: Cohne & Wolfe

“[PayTV] businesses in Asia have been moving from purely broadcast to a more hybrid system,” Le Dreau told Tech Wire Asia at the recent CommunicAsia event, held in Marina Bay Sands, Singapore.

“But just as in any region in the world, there is a big push towards OTT [platforms]. There are more and more OTT players in the market that are trying to challenge the traditional PayTV providers.”

Anyone in the industry is of the opinion PayTV will be seeing a massive shift towards a bigger Internet presence. In fact, a white paper published by NAGRA – in collaboration with research consultancy firm MTM – on ‘The Global PayTV Innovation Landscape’ found 82 percent of industry executives see innovation as one of the top priorities for the industry.

The need for innovation is compounded by slowing growth in PayTV revenues, and the industry is expecting a 32 percent ‘Little or No Growth’ rate till 2020. “New customer expectations in terms of content, functionality and price are a big driver of innovation in PayTV,” the report said. “Customer journeys are changing every year and PayTV services need to change in line with that.”

As a solution provider that offers multi-screen solutions, middleware and security, NAGRA sits in between traditional broadcasters and the emerging entertainment industry – recently, Netflix chose NAGRA as a content protection platform. It’s an exciting time for NAGRA, as they now have front-row seats of the shifting landscape and can position themselves as a middle ground for both sides.

“We have to follow the trends of [enabling] consumers to enjoy content on all their devices, so naturally, when you want to watch content on a mobile phone, tablet, or whatever device you have, the only way to get content on these is through OTT. So it’s become a natural part of the viewing experience,” Le Dreau said.

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“People, both young and old, are not necessarily watching content on TV alone. TV has just become one of many screens – people are also enjoying their content on the metro or underground. So it has to be there.”

Making content available on multiple screens and devices is becoming more of a “complementary service” expected by the consumer, thanks to the proliferation of OTT platforms.

NAGRA’S senior product marketing director Simon Trudelle said consumer behaviors vary among different countries depending on the country’s network infrastructure. For example, cities with high broadband capabilities such as Singapore would see a much higher uptick in mobile viewership compared to countries like Vietnam and Cambodia, which are still working on their own connectivity.

Trudelle says once people get used to network equality, they start consuming more content. Source: Cohn & Wolfe

Trudelle told Tech Wire Asia: “You need access to network equality, and once people get used to it, they start consuming more. I think the challenge is still to monetize some of that consumption – especially for pure OTT platforms – because sometimes the content doesn’t have any exclusivity or extra value, so people watch it a little bit but don’t want to pay.

“That’s where we see the opportunity being very large for traditional broadcasters and PayTV, as in most cases and most markets, they have the rights to the best TV content. So what they must do is extend the distribution to OTT so people have the best access to that content on any screen, any device.”

NAGRA’s technology helps companies do exactly this, by leveraging on the assets they already have and extending their reach and range of services to consumers. But at the end of the day, it’s more of a question of “consumer affordability”, said Le Dreau – the more connected and the faster Internet speeds are, the more inclined the general public will be to plug in.