
The Pay-TV Innovation Forum is a new global research programme for senior pay-TV executives, developed by NAGRA, in partnership with leading research consultancy MTM, designed to explore and catalyse innovation across the pay-TV industry, at a time of unprecedented change.
As part of the programme, we are publishing a series of interviews with leading pay-TV industry executives from around the world to explore their views, perspectives and experiences of innovation in the pay-TV industry.
In this interview, Harry Yim currently consulting at DIRECTV/AT&T shares his views on how the pay-TV industry is evolving and the importance of innovation.
How would you describe the state of the US pay-TV industry today?
The pay-TV and digital media space is going through a period of disruption, impacting some the core aspects of the industry. Whether it is innovation in the distribution and production of content or the rapidly evolving consumer behaviours, it seems that the rules of the game have changed. Most importantly, the concept of pay-TV has been redefined: today we have many more options than just selecting a channel package from our local MVPD[1], while the days of scheduling our lives to catch a new episode airing on a TV channel are long gone. Consumers now expect to watch what they want, when and where they want and do it on any device.
Millennials, who represent the future target demographic for pay-TV services, are viewing new types of digital-first content that has not been part of a pay-TV proposition historically. We see YouTube stars making millions of dollars every year and reaching scale through MCNs like Maker Studio and FullScreen. These changes are disrupting the traditional pay-TV industry, creating various challenges and opportunities for service providers, which cannot be ignored moving forward.
Do you think pay-TV service providers are well-positioned to respond to these changes?
Major MVPDs are in a unique position to respond to and capitalise on these changes because they still control large market share. Currently they have the advantage of being present in living rooms, but there is no telling how long this position will last, with data showing a strong momentum for standalone digital-first services and a growing number of cord-cutters.
Back in the day, Blockbuster had a similar opportunity when they controlled the physical video market. With a bit more foresight, they could have become Netflix.
How important is innovation for the pay-TV industry?
As with almost all disruptive technologies, the need to innovate becomes more critical in order to stay relevant - I believe the pay-TV industry is no different. We have not seen much user experience innovation from the major MVPDs in the last 20 years, but this has been changing and innovation seems to have recently become one of the top priorities for the industry.
The pay-TV industry recognises that it needs to up its game. There seems to be a push to be more innovative and pro-active in terms of introducing new products and features to consumers and guiding them to new intuitive viewing experiences. Another thing that is changing is the way that pay-TV service providers respond to the new entrants. The industry recognises that services such as Netflix, Hulu and HBO Go, are a realistic alternative to a pre-packaged bundle and it is now slowly shifting its strategy from competing against them to trying to cooperate and integrate them into pay-TV platforms.
What other factors are adding to the urgency for pay-TV service providers to innovate?
The most obvious contributing factor is the way content is now being delivered to the audience via the internet. Traditionally, major studios produced content that was then delivered to consumers by MVPDs via their proprietary hardware and systems, and consumers, and there were no other options.
With everything moving to digital distribution over broadband networks and uncertainty about the future of proprietary set-top boxes, MVPDs need to figure out what their value proposition will be in the future. There are multiple roads that they could take and you can see different moves in the market already.
[1] MVPD - Multichannel video programming distributor
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