Digital TV Europe has published the results of its mid-year survey, collating the views of 200 global industry insiders about key developments in the industry.
It addresses five hot topics: the Digital TV Landscape as a whole, the potential for Super-Aggregation, the evolving world of Live-Streaming, the cutting-edge world of AI, Analytics and Keeping the Customer, and the new service provider frontier of The Smart Home-as-a-Service.
Digital TV landscape
SVOD services are the main subject of scrutiny here, with 48% of respondents saying they believe streaming services will likely grow, and pay TV will likely decline. One respondent notes that ‘access to faster broadband will encourage greater streaming uptake’ but pay TV will have the opportunity to benefit by aggregating services. The results also note that the increased splintering of the streaming market presents a unique opportunity for pay TV to present itself as more of a ‘one-stop shop’, reducing the need for users to have multiple streaming service subscriptions.
Netflix remains king of the streamers with 37% of respondents saying it has the biggest impact on the industry (down from 57% in 2020), with Disney+ next with 24%.
In terms of the next two years, 63% believe that addressable advertising will have a ‘highly positive’ or ‘moderately positive’ impact. Respondents also believe that the retention of programme rights by major streamers will have a positive impact, with 36% rating it as ‘highly positive’ and 29% as ‘moderately positive’.
When it comes to technology, 60% of respondents believe that accelerated expansion of broadband capacity and investment in full fibre networks and Gigabit broadband, will have a ‘highly positive’ effect on the industry. Improvement in video compression is also highly rated, with 45% respondents predicting a strong positive impact as it boosts the impact of greater bandwidth to expand the space for streaming and direct-to-consumer services even further.
In this survey, a super-aggregator content strategy is defined as a focus on aggregating apps in a single UX with universal discovery. Among the service providers who responded to the survey, 32% have an exclusive or primary super-aggregation strategy for content. The majority of respondents also believe that the best strategy for aggregation is to build partnerships and integrate the major apps (Netflix, Amazon Prime Video, Disney+) along with a selection of locally-relevant content (regional on-demand and catch-up services).
Some 38% of respondents believe the key challenge for super-aggregators is differentiation from other services with unique functionality, content, or pricing. 32% believe that the main challenge is technically integrating multiple apps into a single compelling user experience. 30% believe the main issue is striking mutually beneficial commercial partnership agreements with content providers.
45% of respondents believe live-streaming has the potential to deliver a vastly superior experience to broadcast. The survey demonstrates that a connected TV in the home environment is the most popular device for streaming. 77% of participants say that they use connected TVs to watch live-streamed content either ‘very frequently’, or ‘quite frequently’. All other devices seem to be popular only when a TV is not available. For example, 64% of respondents say that they favour phones ‘very frequently’ or ‘quite frequently’ only when they do not have access to a connected TV.
In terms of the best routes to monetise live-streams, respondents were evenly split between those who favour monthly subscriptions and those who favour a free model with addressable advertising. Half of respondents note that enhanced viewing options in live-streams – using functionality such as overlays of useful statistics and other information – are the most compelling ways to differentiate from broadcast. However, 57% of respondents believe that matching video latency to that of broadcast is a massive challenge for live-streaming. The related challenge of ensuring video quality, alongside ultra-low-latency, is noted as a hurdle for the future of live-streaming.
AI, analytics and keeping the customer
Artificial Intelligence (AI) and Machine Learning (ML) is expected to have a transformative impact on streaming video. 30% of respondents believe personalised content recommendations using AI is the single most important way to create a ‘true personalised experience to differentiate’ and keep customers engaged. Respondents also note that there is value in personalised content packages that can be changed on a rolling basis. The survey shows that the ability for consumers to only pay for services they actually need/want to consume, and to have this adapt to their circumstances and needs, is a highly attractive proposition.
Just under half of respondents, for whom the question is relevant, say they currently use AI to retain customers. 14% claim to make full use of AI technology for this purpose, while 33% say they use some AI capabilities but it is not central to their customer retention approach. Many respondents cite a lack of specialised skills across media organisations as the most significant challenge when using AI. The survey suggests that, alongside the cost relative to return, this could be creating anxiety around using AI capabilities to their fullest.
The smart home as-a-service
Looking to the future, 24% of respondents believe that smart home services will be the most important element of a service provider’s offering to subscribers. However, 34% believe that smart home services will be one important element, but not the most important. Where respondents are more in agreement is where service providers currently compete. The most significant differentiator for many respondents (41%) remains broadband speed. Speed is of course the ‘primary focus of fixed-line service providers […] the ability to offer headline grabbing top-tier speeds of 1Gbps-plus [is] seen as a key marketing tool.’ However, 67% of respondents endorse the view that in-home connectivity is becoming ‘much more important’. The survey highlights that there is now a customer perception that WiFi speeds should match wired connections.
On the business facing side, 49% believe revenues from smart home services are not yet sufficient to justify costly investment. There is also concern that service providers will be held responsible for performance and technical issues with devices over which they have no direct control, and a significant amount of concern about the potential for reputational damage if home network security is breached. Due to this, 57% of the sample rate home security as ‘essential’ for smart home services, with a further 33% rating it as ‘very important’.