Navin Natoewal, General Manager, Philips uWand on why pay TV operators need to adapt their services’ user interface and customer experience to respond to the rise of cloud-based apps and IP-delivered content.
The cloud has become a double-edged sword for operators. On the one hand, internet-based delivery has greatly reduced distribution costs, but on the other it has widened content availability. Consumers are no longer tied to an operator’s set-top box or pay TV service to watch video on demand. Instead, they can view the latest and greatest TV on whatever device they like, completely bypassing an operator’s platform if they so wish. In reality, however, most consumers still prefer the convenience offered by pay TV, provided the service and user experience are up to par. Crucially, these services are no longer just about giving consumers access to a wide range of channels, they are also about creating a platform that can deliver live TV, OTT content and premium services through a single user interface.
Yet it hasn’t always been this way. For a long time, operators had total control over their subscribers’ viewing habits and complete ownership of the user experience, but the game has now changed. Today’s viewers have more choices and are opting for the platform that is easiest to navigate, and at present that’s not an operator’s set-top box. The user interface and remote control are now essential to help attract customers and keep them locked in to a pay TV provider’s platform. Convenience has become more important than ever – if content is king then the user experience is queen.
The rise of cloud-based content has put operators on the back foot. Although set-top box hardware has evolved to support the growth of online content, the user experience has not, and this is a deal breaker. An operator’s set-top box is supposed to offer compelling content and a great user experience. It should be the gateway to accessing OTT services and consumers shouldn’t need to go elsewhere to watch the latest TV. Unfortunately, this is no longer the case. The set-top box user interface is out of date, and the button-based remote control has become archaic and is no longer fit for purpose. According to research by Accenture, consumer preference for using Connected TV to watch online video has slipped from 36% in 2012 to 31% in 2013. Evidently, consumers are becoming less likely to use a set-top box as their content hub and they are turning to other devices instead.
This situation has led to operators trying a number of different strategies in a bid to increase revenues and retain ownership of their subscribers. Some have embraced the rise of second screens by letting consumers use these devices as a remote control. Others have moved closer to the smart TV, providing their service as a smart TV app in an attempt to reduce CAPEX. However, neither strategy is viable as they both put operator revenues under strain, and by adopting these approaches operators are effectively pushing consumers away from their branded service and billing system.
The ‘operator as an app’ model has additional drawbacks. Here, operators forego any control over the user experience and stand to lose brand recognition. Viewers will also judge the quality of an operator’s service based on the performance of their smart TV, which could have serious implications for an operator’s reputation. Ultimately, viewers expect the same experience from an operator’s Smart TV app as they would get from a set-top box, but this is not always the case.
Considering all this, it would be easy to conclude that the rise of cloud-based content has put the future of pay TV in jeopardy, but this couldn’t be further from the truth. Despite the growth of streaming video and on demand services, consumers still prefer the approach of pay TV operators in bringing live TV, pre-recorded and premium content together on a single platform. Today’s viewers demand convenience, and an operator’s hardware is better suited to deliver this than a smart TV, tablet, or other internet-enabled device. Operators already have a billing relationship with the subscriber and their set-top box hardware is already in the living room. Combine this with the convenience of accessing a variety of online services from a single platform, all bundled together into a single monthly bill, and an operator’s set-top box becomes an exciting prospect all over again. Pay TV operators have the potential to make this a reality, they just need to revolutionise the user interface to cater to the new use cases. A better user interface stems from a better remote control.
Positioned at the centre of TV interaction, the remote control is fundamental to the future of operator revenues. It’s the hardware that drives the user experience, but it’s out of date, and the button-based up-down-left-right approach to navigation makes using TV services unnecessarily difficult. The remote control is frequently recognised as the cornerstone of the TV experience and appears in all ads for both TV sets and pay TV operators, yet it is often overlooked when trying to increase engagement. With consumers looking to access internet-based services from a single platform in the living room, it’s more important than ever that the remote control is up to par as operator revenues are at stake. By introducing new remote control technologies (such as direct pointing and gesture control) to branded set-top boxes, operators can put an end to the days where their revenues are cannibalised by other internet-enabled devices before consumers have decided on their OTT platform of choice.
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