The pay TV landscape is changing. This is not news, obviously. But the pace of the change, how it’s shaping the industry and most importantly, understanding how TV operators are reacting to it are making things really interesting.
Let’s level-set, first, to see if the change is indeed already here. My test case is Israel (easy, seeing as how I live here), home to around 8 million people. That’s equivalent to around 2.4 million potential TV households, most of them early adapters by nature and great consumers of television, at around 4 hours a day — which is more than the global average.
In 2014, Israelis had but two options only for pay TV: Cable or satellite (or DTH operators as some call them). The market was neatly divided between “HOT,” the cable operator, and “YES,” the satellite operator. Some consumers settled only for free, over-the-air channels, but not many. So, life was really good for the cable and satellite operators, with captured audiences that paid well for their services.
In 2017, we now have seven (!) pay TV operators. Five new operators, all of them Over-the-Top (OTT) providers, were “born” here in the last two years. And in addition, of course, there are the global players, like Netflix and Amazon. It got to the point where even a food chain store in Israel created a new TV brand! After all, when the unmanaged IP network became so powerful, it was far easier to get into the TV game. The end result for YES and HOT is a huge churn rate of customers who chose to “Get less and pay less,” which is largely the strategy of the new OTT players.
It follows that the legacy TV operators here are facing a very real problem. A threat to their very existence. This might not be the situation yet in other countries, but trust me, it will be, and sooner than you think.
Even more interesting are the strategies the incumbents are developing to fight back. I’ll focus primarily on the satellite providers (with a promise to dedicate another post for cable providers.) Satellite providers are especially interesting for this discussion, because they are pure pay TV video players. They have the best of the best video broadcast network … in a world that is, unfortunately for them, going to unicast. Thus they are more exposed to the changes, and more stress.
YES is an Israeli satellite provider and also a customer of our Infinite Video Platform. YES developed a thought-provoking strategy to fight back the new OTT competitors: They established an OTT brand of their own, called STING TV, and marketed it mainly to millennials. It’s the classic ‘If you can’t fight’em, join’em’ strategy, but with few twists. YES is fighting back with price, but also with the quality of their content, seeing as how they already have the endless richness of quality content from their mother satellite company. YES is also fighting back with video quality, quick roll outs of innovations and a very flexible offering — all enabled by the Infinite Video Platform.
On the other side of the globe, SKY New Zealand, another satellite operator and Infinite Video Platform customer, faces a very similar problem — new, multi-screen OTT operators are coming in to bite at its market share. The threat is similar, but the strategy is quite different. SKY New Zealand chose to upgrade its existing system, evolve with it, and extend its capabilities, using a hybrid model that gives them the best of both worlds — IP and broadcast.
So: Two satellite providers with very similar problems, but with very different resolution strategies. Behind them is one platform that helped both of them to achieve their goals – Infinite Video Platform.
There are many other strategies worth discussing. I invite you to hear more about it, first hand, from our customers and experts. We’ll be at CES in the Wynn hotel, La Tour Ballroom. I hope to see you there!
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Author: Yaron Agami
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