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GeneraX.ai
The Future Of
Pay-TV In The Age
Of Streaming
Affine
EMT Practices
The rest is history. Netflix emerged as the glorious gladiator in the streaming
domain, leading the pack, innovating content consumption, and revolutionizing
the home entertainment business like no other. According to Statista, as of
2022, Netflix was leading the OTT race with a whopping paying global
subscriber count of over a 221million!
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Source: Statista
As with any industrial revolution, something had to feel the adverse effect of
this global expansion, and in this case – cable TV.
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1.8 million Subscribers canceled their Pay-TV subscriptions in 2020. Such was
the impact of streaming services and the revolution brought upon them. Simply
put, streaming is the decisive force that has powered cord-cutting.
Streaming services provide users with absolute control over viewing options
and content diversity, something Pay-TV has always lacked. Pay-TV also had
the added deadweight of multiple immersion-breaking ads that drastically
impacted viewer engagement even with good program content.
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NumberofpayTVhouseholdsintheUnitedStatesfrom2013to2026(inmillions)
120
100.5 100.599.6
100
97.7
94.3
90.3
84
78.2
Numberofhouseholdsinmillions
80
72.9
68.5
65.1
62.3
59.7
57.2
40
20
20132014 2015201620172018201920202021*2022*2023*2024*2025*2026*
The pandemic was an unpredictable event that turned profitable for streaming
services as people started banking on OTT platforms for content consumption,
thanks to the worldwide lockdown. The additional factors of access to high-
speed internet and a device-agnostic approach to content consumption only
added to the boost for the accelerated growth.
Watchinglivesports 19.5%
Watchingliveentertainmentevents
(awardshowsetc.)
11.66%
Internetistooslowforstreaming 10.09%
servIces
Watchinglivenews 9.53%
Havingmultiplestreamingservice
subscriptionsismoreexpensivethan 8.02%
cable
Internet/telephoneproviderforcesmeto
subscribetocableaswell
7.1%
DVRaccess 6.98%
Gettingcableforfreewithmy
internet/telephoneprovider 6.71%
DonotwanttopayforequipmentthatI
6.63%
wouldneedtousestreamingservices
Cableiseasiertousethanstreaming
6.43%
servIces
Watchingpoliticalcontent 2.37%
Other 4.97%
Shareofrespondents
Source: Statista
An ace card Pay-TV usually had was sports content. Rights to sports content
fetched a fortune for these organizations, and the pandemic brought these
events to a screeching halt, accelerating cord-cutting. Even though the pace
has picked post-pandemic, sports is one of the biggest reasons Cable-TV
subscriptions make sense for many people.
Netflix’s initial USP was its unique strategy for acquiring publishing rights for
shows and movies. By paying more upfront, it was able to build a content-rich
streaming library.
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BOJACKHORSEMAN
NestEpecon
NETFLIX
Players like Disney and HBO built their streaming platforms and have gotten
back many of their titles from Netflix, landing a devastating blow. However,
Netflix had foresight about this and had started producing original content with
shows like BoJack Horseman, House of Cards, and Stranger Things doing
wonders for the company.
On top of that, the players in the streaming market are leveling up their game,
producing quality content to woo viewers. HBO Max and Apple TV have
performed excellently, thanks to this strategy.
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Source: Bloomberg
The market is overcrowded, and everyone wants a piece of the streaming pie.
Netflix has lost over $50 billion of its market cap, and its panicked investors
resorted to selling their shares. On top of it, Netflix laid off many employees
recently.
The combined impact of all these factors is so severe that Netflix plans to
introduce a ‘basic’ account option with ads to attract more viewers and handle
price-sensitive geographies. Amazon prime has already rolled out this model,
and the other players may have to succumb to this trend not too far away in the
future.
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The biggest weapon they always had was sports content. Other than that,
players like Paramount, Comcast, and Viacom are already in the business of
streaming, so it’s not exactly a battle to the throne. The truth is that viewer
preferences and behavior have changed drastically over the years. Pay-TV
needs to stand out and offer an incentive to attract users.
Pay-TV businesses can take a page out of the streaming model playbook and
implement it for a taste of success. Players like Amazon are already running ads
on streaming services, and Netflix plans to do it eventually with its basic
account. So, running ads isn’t the issue here; the irrelevancy and bombardment
of ads is, however, a critical issue. The solution – relevant, crisp ads placed in
appropriate slots and personalized to suit the viewer.
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Pay-TV businesses also need to stop bundling and let viewers build a package.
In short, personalization is the key for both ads and content. Nobody wants to
pay for a pre-built bundle of channels just to watch a couple of relevant shows,
movies, and content while unnecessarily paying for content they don’t
consume.
Pay-TV always had to rely on viewership ratings and TRP from rating agencies,
and there was always a time and logistical delay in obtaining data. Now that all
the players have a hand in the streaming game, accessing data is not a pipe
dream anymore, but wisely leveraging it is not a simple task either. Insights are
only valuable when actionable output is obtainable from them.
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Ads relevant to particular users, strategically placed within the content, can be
a game-changer for businesses. Data analytics and intelligent algorithms are
essential in performing real-time monitoring and decision-making..
The plethora of data from user profiles and viewership data powered by the
right AI solution can turn fortunes around for Pay-TV to bounce back into the
home entertainment business and sustain itself in the long run.
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Ad consumption has become a tricky affair. Gone are the days of long ads
between programs and high-demand segments. Viewers don’t put up with ads
as much as they used to. Optimal Ad Space Recommendation is a solution
that considers viewer demography, preferences, and other crucial factors to
analyze viewer behavior. This helps choose the best ad to display amongst your
ad inventory for maximum ad engagement.
Many such solutions tailored for Pay-TV, Broadcast, and OTT platforms can
accelerate their performances while efficiently achieving organizational goals.
Affine has an arsenal of such solutions across multiple verticals and a track
record of working with major clients across the industry.
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Learn more about how Affine can revamp your media-entertainment business!
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