European Pay-TV Operators Up Focus on Innovation, Customer Experience

Improving the customer experience and driving innovation are key priorities for European pay-TV platforms as future growth becomes more challenging, according to NAGRA’s Pay-TV Innovation Forum report.

Conducted with MTM, the report surveyed pay-TV industry executives in Europe in May of this year. The panel of respondents indicated that strengthening the core pay-TV proposition, while also diversifying into new ways to monetize the existing subs bases, is a key strategy for the future.

“Although European pay-TV executives are not yet seeing the same levels of disruption anticipated by their U.S. counterparts, they are anticipating a more challenging market environment—future growth will be driven by new products, rather than traditional pay-TV offerings,” NAGRA said.

Two factors are significantly transforming the sector: the widespread availability of lower-cost OTT services and rising nonlinear consumption. In response, pay-TV operators in EMEA are ramping up the customer experience with 4K (offered by 25 percent of providers in 2017, up from 8 percent in 2016), third-party apps (53 percent, up from 46 percent), and stand-alone OTT services (36 percent, up from 31 percent).

Innovation is another priority as platforms explore skinny bundles, personalized packages, and seamless multiscreen experiences. There are three areas listed by the surveyed execs that are seen as essential to future growth: investing in next-generation content aggregation and discovery, developing advanced advertising and data offerings, and building seamless multiscreen TV Everywhere services.

“Industry executives acknowledge that the European pay-TV industry is changing, with pay-TV operators asking themselves how and where the next-generation of consumers will view video content, and how they can best meet these needs,” said Jon Watts, managing partner at MTM. “There is a strong consensus that future growth will be significantly more challenging across the region, with the exception of a couple of pay-TV markets in Southern and Eastern Europe. Future growth will be driven by new services, as operators look to manage the proliferation of lower-cost offerings. This is an exciting time for the industry—there are multiple opportunities for growth, in a wide range of areas, but diversification is key.”

“There is a strong call to action across the European pay-TV industry to respond to these external pressures by transforming business models and addressing new market segments with specific offerings,” added Simon Trudelle, senior director for product marketing at NAGRA. “The research indicates that the pay-TV industry needs to learn from the new breed of digital-first and data-led OTT service providers. To break away from the traditional pay-TV mind-set, operators will have to be more agile in their approach to meet consumer demand, putting specific focus on microservices, data analytics, continuous testing and integration.”