The Good, the Bad and the Opportunity

When it comes to viewing content, traditional TV remains the first choice among adults, according to Nielsen. However, as technology advances and consumer behaviors shift, the global pay TV industry has entered a period of disruption. Increased competition from over-the-top providers, the need for actionable data analytics and an increasing, evolving piracy threat need to be top of mind.

To determine if operators are doing enough to meet these challenges, Nagra commissioned MTM, a research and strategy consultancy, to run a global initiative for senior pay TV executives — the Pay TV Innovation Forum — designed to explore and catalyze innovation across the industry at a time of unprecedented change.

Initial findings from the first half of 2017 have highlighted several challenges and opportunities:


The one challenge that has proved more disruptive than all the rest is, not surprisingly, OTT. As OTT providers offer more on-demand content and skinny-bundle packages at lower prices without fixed-term contracts, consumers are beginning to demand more for less from pay TV operators. And the numbers are telling.

While linear TV continues to dominate viewing figures, on-demand subscription and catch-up services are currently being watched by about 50% of internet users each week, per a GlobalWebIndex study in Q1 based on data from more than 72,000 internet users age 16 to 64. OTT players have also made significant moves, such as Amazon’s one-year deal with the NFL to stream Thursday Night Football games live. It’s just one example of an evolution in delivery that makes it more important than ever for pay TV operators to diversify their offerings.

U.S. pay TV providers have already met the unrelenting appetite for catch-up and OTT content by rapidly integrating these new technologies and forms of content. In response to changing consumer behavior, all U.S. pay TV operators now offer IP connectivity and DVR services on their set-top boxes.

However, new consumer behaviors require pay TV providers to evolve their business models to offer more multiplatform TV everywhere packages, improve their skinny and thematic bundles, and sell adjacent services, such as smart home security.

Industry experts also believe that pay TV companies need to embrace partnerships and better collaborate with technology suppliers when delivering these new products and services. And they need to deploy them fast enough to cope with the increasing buying power and agility of digital giants like Amazon.


In today’s digital age, broadcasters and content owners are looking to pay TV companies and their rivals for ways to collect and leverage customer data. Promising better data services gives providers the opportunity to offer content owners the chance to expand their audiences, as well as target their viewers with greater accuracy.

A growing number of U.S pay TV providers are taking advantage of this opportunity — with 45% now offering advanced advertising and/or data services. MTM’s research finds that more than half of TV executives believe improving customer data and analytics will have the most significant impact to the industry over the next five years. With personalized content and targeted advertising, pay TV operators can better understand their customers, deliver more value and improve sales, marketing and customer services.

One way they do this is through viewing recommendations. Interestingly, 55% of U.S operators offer viewing recommendations, according to MTM. Although these numbers are growing each year, providers cannot afford any delay when it comes to data. As machine learning, artificial intelligence, and predictive analytics technologies improve, the importance of data and analytics, already mastered by the likes of Netflix and other OTT players, will only increase.

Broadcasters and content owners are also looking to the pay TV industry to help protect their valuable content and combat the growing piracy threat from content re-streaming. The latest content protection measures, such as watermarking coupled with online monitoring and tracking, provide a special set of analytics that deliver the information needed to take action against piracy, whether domestic or foreign.

For the North American market, the road ahead looks hopeful. However, while providers are evolving their propositions, there is more that needs to be done. To combat the challenge of OTT, cord-cutting and piracy, providers need to step up their push into data analytics and beat the competition with new, more innovative services. The bottom line is: TV behavior is changing and pay TV providers need to ensure they are part of that change.