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Digital Transformation Will Not Save Television

First, a cable provider that shifts to become a streaming video service is not going to survive by that alone.

Ishan Manaktala

Guest blog author Ishan Manaktala (Image credit: SymphonyAI)

If you are the ninth video streaming service, you might as well not do it (i.e. Crackle). And in fact, many multichannel video programming distributors are not making the shift well. Transitioning from being the local MVPD with a lock on the regional market, to competing with an endless variety of other services requires picking out a reason why you’re a destination that’s different from every other.

The Tennis Channel serves up a single destination for the tennis junkie. HBO famously invests in content that is uniquely must see and grows the power of their brand. A streaming service that packages channels has to stand out.

Though there is now a wealth of content packages to choose from, cable providers do have a chance to offer programming options that simply can’t be found elsewhere. And after all, baby boomers are a large demographic group who may continue with traditional pay TV if it can deliver value and delight.

But even then, the delivery needs to be simple and low friction to hold on to an audience and grow it.

Getting Operations Right

There are a number of ways that vendors can maintain their competitive edge, in addition to making the user experience more convenient and useable. This includes automating their processes with a goal of enhancing the customer experience.

Providers need to use data from viewers to determine customer expectations and sentiments, and speed issue resolution. These businesses also need to virtualize. 

An idea here can be to put a box in customers’ homes through which all services come from the cloud. The result for MVPDs is reduced costs and the ability to offer innovative services more easily. For example, virtual customer premises equipment (vCPE) can allow providers to upgrade bandwidth or services without in-home visits or hardware replacements. These could be described as more like virtual MVPDs.

Needs can be anticipated before they arise. Lengthy calls and in-home repair appointments can be reduced or eliminated.

Keep Viewers From “Cord Cutting” 

Fewer and fewer millennials and Gen Z viewers are watching traditional TV and that will likely continue. And they aren’t just being pulled away from these traditional channels by streaming services. Increasingly, they are also consuming content from friends and influencers on social media platforms. They are investing in gaming environments. 56% of the TV and film viewing by millennials is on computer, tablet, or a gaming device.

65% of global viewers have pay TV compared to Gen Z’s 57% and millennial’s 51%. Overall, 69% have a streaming service subscription (Gen Xers 77%, Gen Zs 80%, and Millennials 88%).

Baby boomers may stick with traditional cable TV. However, Generation X — aging but open to changes — occupies an uncertain middle territory where they can and do shift into cord-cutting. And it’s a trend that is kicking traditional content and television providers right in the market share. There were 39.3 million cord-cutters in 2019 and it’s predicted to be 50.2 million by 2022 in the US. 

Close to 58 million Generation X viewers had a cable TV subscription in 2019, according to eMarketer. In order to maintain and perhaps even exceed these numbers in the future, MVPDs need to put aside older, more laborious manual processes and look to automation to create a seamless experience for their customers. Due to ever-increasing programming costs, the price for OTT services will keep rising, which makes them vulnerable to competitors like MVPDs who have a bigger budget to absorb these costs.

Time for a Change

The traditional focus on growth that MVPDs have maintained needs to shift to a focus on the customer. This is a critical time to keep and even gain market share as more choices continue to arise. MVPDs will succeed if they will track trends and offer the streamlined, user-friendly automated services that today’s customers are shopping for.

If a genie came out of a bottle and gave you three wishes? What would you ask for? The holy grail in media remains: (1) What content do you produce? (2) When the content is produced, who do you distribute it to and at what price point? (3) How do you maximize the rights and obligations of distribution agreements?  

Getting It Figured Out

Those goals are easier listed than pursued, however. One set of tools media CFOs have been taking up through the pandemic are digital financial and distribution agreement solutions. The aim is to digest data sitting in departmental silos and get a 360-degree view of the customer. With that in hand, presuming the data is normalized and understandable, logical decisions and next steps can be gleaned. That approach can improve efficiency and effectiveness and reduce risks. 

Let’s examine churn. Media industry leaders have accepted churn as a reality. But what can data tell us? For instance, why does a consumer drop a subscription or come back? If we can figure it out, we can reduce customer acquisition cost. Companies can win back lost subscribers through an era of volatile and evolving content consumption.

But the first thing is to normalize data so it's legible to software, and draw it together out of systems of record. The second step is analyzing the data to capture insights. Next the company turns those insights to action to improve the business. Through this the eye is kept on the consumer, and where the consumer is headed. Digital transformation of content and content delivery will not save traditional media on its own. But the companies that use digital financial technologies wisely in the next year can find a path to survival, and they can find the path to sustained growth.

Ishan Manaktala is a partner at private equity fund and operating company SymphonyAI whose portfolio includes Symphony MediaAI, Symphony AyasdiAI and Symphony RetailAI. He is the former COO of Markit and CoreOne Technologies, and at Deutsche Bank Ishan was the global head of analytics for the electronic trading platform.