Once front and center in the world of consumer entertainment, the living room has lost its central role in today’s connected household. Digital content is no longer centered on a television and the delivery method is no longer driven by a single content provider or even a cord to connect to it.
Today’s households have diverse options for searching through a broad mix of channels, bundles, over-the-top services, delivery endpoints and accounts to find the specific program they want to watch. There’s the traditional cable provider, who offers the expensive service bundle that may or may not provide access to certain programming. There’s the OTT provider that gives access to a number of streaming services: some free, some pay-per-view, some pay-per-month. With all the reports about the growth of OTT video and the demise of linear TV, it is difficult not to feel some anxiety if you are a cable TV provider.
There is no doubt consumer viewing patterns are changing as a result of the growth of broadband (fixed and mobile) and connected devices. According to research firm Strategy Analytics, U.S. legacy pay TV providers have lost 3.2 million subscribers over the last 12 months, and U.S. cable TV providers have accounted for nearly a third of this decline.
Until recently, limited competitive alternatives meant consumers had little choice but to accept and pay for whatever level of service cable operators and other pay TV providers delivered. Today, cable operators and other pay TV services are faced with a rapidly changing competitive landscape as a result of the growth of lower-cost virtual multichannel video providers and subscription VOD services competing for consumers’ TV and video dollars.
Subs Call the Shots
Consumers have more choice in pay TV, direct subscription-based online channel access and options for lower-cost OTT video subscriptions that provide much of what they were receiving from cable providers. From smart speakers to other smart home services, more companies are angling for mindshare in the home with enticing and “sticky” offers. The competitive challenges from OTT video will be compounded by stronger competition by telcos and other service providers seeking to gain a competitive edge by bundling services across broadband, video, wireless, video content and other value-added services to increase stickiness — meaning if you lose a customer it might be harder to win them back.
In addition, service providers are just starting to build out fixed wireless access with 5G to deliver broadband and video services to more households, adding to their potential competitive reach beyond their fiber footprints. To survive and succeed in this rapidly evolving pay TV marketplace, cable providers must put the customer front and center in the new OTT world. Failure to become more customer-centric and offer improved digital engagement leads to risks of losing subscribers to more savvy competitors, missing opportunities for revenue growth through new digital service offerings and receiving poor customer satisfaction ratings, leading to weaker market positioning and brand perception.
Customer loyalty in the competitive video market is thus best mapped to an improved digital-centric customer journey strategy that refreshes the entire customer-management approach and makes it easier for the subscriber to sample, engage, consume and transact however and whenever they choose:
• First and foremost, this requires a unifying customer interaction- management strategy across all channels. In other words, every entry point for customer interaction must be as relevant and comprehensive as any other.
• Second, the customer journey must map to a rich set of digital services and allow for unified product ordering across the provider’s own and third-party OTT products. Ideally, the set-top becomes the primary service catalog, consumption and transaction management platform.
• Third, the purchasing and billing process must be easy, with one or two clicks from service catalog to payment and access. Charges should be able to be pushed to the cable bill as well as external payment mechanisms.
• Last, any customer issues can be addressed through predictive customer care. Customer contact that notifies a customer of outages, service changes and service follow-ups should be integrated into the entire customer service process.
This customer-centric transformation is not just customer-management facing, but must be integrated with the business support system stack, adding automation through systems that enable monetization, access control and revenue management, as well as mediation and data preparation. This modernization impacts areas such as billing and charging, partner management, policy management and service assurance. This transformation should also allow cable operators to build new business models with OTT video providers and other partners that enable the monetization of digital video services. Cable providers also have the opportunity to set up creative revenue-sharing programs so that all parties are encouraged to make partnerships work. This may require an upgrade or even an overhaul of existing BSS in order to ensure that video customers are tracked, billed and serviced properly.
Full Speed Toward a Dynamic Future
As the future of digital content is dynamic and will be accelerated by OTT services, so too must be the digital strategy for the cable industry. Rather than dying a death by thousands of cord cuts, the time for a digital-centric technology strategy is overdue. Now is the time to unify the contact channel experience, put the customer journey front and center and make it as easy as possible for the customer to do business with you and partners, whether in the living room or on a mobile device. Long-term success will be driven by more dynamic engagement with customers and investment in solutions that can de-risk and speed up this transition.
Paul Hughes is director of strategy at Netcracker Technology.
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