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The race in TV evolution

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manuela's picture

The reality is that people are watching more videos than ever, but not all these videos are coming from a TV set.

What effect does this have on the TV business model, and how can service providers change along with it? Well, they have already started, with increasing on-demand capacities, online video supplementation and a generally more ‘a la carte’ user viewing system.

While show creators and networks make money from ‘cord-cutters’ habits through deals with online video providers and from advertising on their own websites and apps, broadcasters earn money when their programming is broadcast traditionally. Unless broadcasters can adapt to modern platforms, there   will be no revenue.

Online video providers
Service providers are starting to collaborate with over-the-tops so that users can re-watch programmes on their website. OTTs (over-the-top content) provide video from a third party, such as Netflix, without a multiple system operator. This can potentially decrease churn rates, and increase Video on Demand usage, but then the quality of a TV screen is lost (and depends on broadband quality).

For example, the BBC iPlayer uses the broadband platform to bring entertainment in the home on a PC screen, and users of this have increased exponentially. Sentech (the South African broadcasting signal distributor) is currently working on a way for South Africans to stream television content online similar to the BBC iPlayer.

Dstv goes with change
Last week, DStv announced that DStv on Demand (a catch-up streaming service available to premium subscribers) is now available on the iPad, and soon on Android, freely from the iTunes App Store.

These changes show that DStv is trying to keep up with international trends, and not denying change. With the growth of on demand, HD channels, and different channel bundles, the SP is recognizing that subscribers want more personalized choice in programming, freedom to watch when they want, but also good quality, which is not always available online with slow loading times, buffering, and poor image quality.

Greater demand for unbundled packages
More and more people are buying smaller and cheaper bundles with fewer channels. Earlier this month the SAARF (South African Audience Research Foundation) reported that according to its Television Audience Measurement Survey (TAMS) the number of households on a DStv Compact subscription had surpassed DStv Premium.

It also indicated that the DStv BoxOffice movie rental service was off to a good start with 40% of PVRs registered. This programme allows you to watch blockbusters from your device with your Dstv account, or even if you are not a subscriber. Movies cost R25 to rent, and the first is free.

Uncertainty in DStv subscriber numbers
However, according to mybroadband.co.za, various satellite TV installers said they had noticed a decrease in the number of new Dstv installations particularly in Gauteng and the Western Cape. Naspers, the creators of Mnet and Multichoice (who in turn launched DStv in 1995) explained the decrease by saying that it is “challenging year-over-year comparison” because of the major growth MultiChoice saw during the FIFA World Cup in 2010.

With less Pay-TV subscribers and less impressions, SP advertising revenue is decreasing as advertisers are taking some of their money online.  To make up for ad revenue loss, SPs are demanding a higher price for content, which means content rights price increase while subscribers decrease. There is consumer demand and competition pressure for pay TV to unbundle and increase selective pricing options.

With these changes in consumer behaviour, wants and different avenues at their disposal, SPs need to provide a broader video experience by integrating and expanding user experience into and away from online video. They need to make themselves needed again by giving subscribers what is online, and more. 

Image from http://www.fastcompany.com/1558141/apples-ipad-disrupting-network-tv-business-model-id-buy-dollar