Turning a Stumble Into a Run: Pay TV Lifelines for CSPs

There is an aggregator role that is necessary in the industry, in economic terms and in usability terms

And we know this is cold comfort to many CSPs. The revenue from these services isn’t anything to write home about, and the numbers probably don’t tell the whole story. A large chunk of those subs won’t stick around that long, drawn in either by novelty or some customer acquisition gimmick. (Free Roku, anyone?)

But many are bullish on the growth and long-term success of these programs. Ovum estimates that SLINs will grow from a fifth of the global OTT market now to a third of the OTT market in 2022.

Analysts at The Diffusion Group (TDG), meanwhile, expect legacy pay TV services to decline from 81% of US households in 2017 to 60% in 2030, while virtual pay TV will grow from 4% of US households to 14% in that same timeframe. That’s represents a 350% increase over an admittedly meager base. But it still indicates an overall trend.

So there is promise in the virtual pay TV model. And there’s potential for another trend that could break in favor of CSPs: fatigue.

Come together, right now

I’ve written on numerous occasions that I’ve been a cord-cutter since at least 2010. Maybe earlier. In the early days, content was harder to come by, and not always above-board when you did find it. Sometimes having no cable meant reading a book or going for a walk instead of watching TV. There are worse things, right?

But this meager (and healthy, if we’re honest) sacrifice just isn’t necessary anymore. In fact, the opposite is often the case. A cord-cutter with access to Netflix, Hulu, and Amazon Prime Video—or any one of those, for that matter—has tens of thousands of viable entertainment options at his or her disposal. You need to go in with a plan. It’s best to know what you want to watch before you go down those rabbit holes.

But there’s no guarantee what you want to watch is an option—at least for the subscription cost you’ve already paid. You may end up having to buy a movie or episode of your show of choice, only to notice later that it was available for free on another platform.

These are the first-worldiest of First World problems, I know, but they can be annoying little time-sucks when the ultimate goal of what we’re talking about is leisure and entertainment. There is a good case, however, to be made for a capable party to pull together and present content in the way that CSPs traditionally have.

“There is an aggregator role that is necessary in the industry, in economic terms and in usability terms,” said Nuno Sanches, Group Head of Fixed Product Development at Vodafone, in a really interesting report from late last year by Videonet and digital TV security and monetization firm NAGRA. “Operators are uniquely positioned to capture this. The nature of the telco bundles makes it very easy to fold content in. We have billing relationships in place and an existing customer base that can be migrated from linear to SVOD or Pay TV bundles.”

The report, titled “How Pay-TV can triumph in a post-OTT era” also contains insights from other CSPs, like Javier Lucendo De Gregorio, Main Screen Video Services Manager at Telefonica, who said “Now we’re in a position where we can even become aggregators of aggregators. Aggregation can bring together different sources of content, but also consistent services, such as catch-up or network PVR, together with a curated content selection for every customer, plus business intelligence and targeted advertising. In the end there can be a better value proposition for the final customer at a lower added price point.”

Is this enough to pull in subscribers bent on blazing their own trails in the Wild West of the cord-cutting era? Probably not yet. But there are many miles left to go, and many chances for CSPs to turn this stumble into a run.


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