Growing multiscreen viewing trend opens up new opportunities for pay-TV providers

A new report from Pyramid Research has found that as the consumer demand for OTT services increases, pay-TV providers are being forced to adapt and evolve their business proposition to provide multiscreen models to better satisfy their growing customer base. Such huge changes present massive opportunities for the pay-TV industry to introduce multiscreen business models, increase customer loyalty and generate higher revenues.

We’ve already seen significant second screen growth. Last year’s sporting summer provided the perfect opportunity for consumers to get to grips with their new multiscreen TV options to keep up to date with the latest scores and results.

The UK also saw social media conversations rocket during popular programmes such as the X Factor, Britain’s Got Talent, and of course, the Olympics, as consumers shared their thoughts on what they were witnessing on TV with their peers. Demonstrating this, a staggering 150 million tweets were posted during London 2012, making last summer’s games the very first social Olympics. This growing trend has brought with it an influx of companion apps being introduced to the market, such as our very own ANT Galio Move. Apps like this extend the TV experience, allowing consumers to interact with their favourite TV shows, follow relevant hashtags on Twitter and discuss their views with friends online, all from a second screen.

Consumers are getting increasingly comfortable using multiple screens and interacting directly with the programmes that they’re watching, and the pay-TV industry is no different. Consumers now want to watch video services on multiple screens, and as a result, pay-TV providers must now evolve to meet their customer bases’ changing requirements. Launching OTT-like video services enables pay-TV providers to extend their reach to a new wave of customers. It’s an exciting time for the industry, with huge opportunities to create new, additional, revenue streams for those prepared to respond to changing consumer viewing behaviour.

What we watch shapes how we watch

Data released by Twitter recently has shown how the type of content we are watching can impact our second screen social media activity. For example, if people are watching a gripping drama like Homeland, they are far less likely to tweet at the same time. On the flip side, if it’s a light entertainment show like X Factor, people will consistently tweet throughout the show with peaks in Twitter activity directly linked to specific contestant performances. Meanwhile investigative shows like Panorama stimulate prolonged Twitter activity with viewers discussing it during the show but also after it has finished.

The report is targeted at advertisers however it also contains valuable information for the wider TV industry; consumers no longer just passively watch TV, Twitter adds a new dimension to the viewing experience. We are likely to see more TV shows actively encouraging viewers to go online whilst the show is on.

Broadcasters already trail hashtags before shows, but this is just the start. They are now using Twitter to evaluate the performance of shows, and it will be fascinating to see how this data is used and impacts programming and additional, associated content in the future.

Second screen apps here to stay

We’ve talked previously on this blog about hardware advances that were showcased at CES  this year. Another significant trend at the show was the second screen apps that are supporting them. The number and range of second screen apps on display this year demonstrated that the second screen is here to stay.

While the CES demonstrations weren’t necessarily showcasing features that we haven’t seen before they did highlight that second screen applications have reached mainstream coverage with TV titles such as Variety now looking at the impact this technology can have on the industry and ultimately the consumer.

With this growing confidence in second screen apps the market is likely to become increasingly crowded. There is already a multitude of apps out there, and this number is only going to grow. The real winners will be the ones that are able to tap into changing consumer behaviour.

CES 2013: Bigger, it seems, is better

For the first time in a few years, the focus for TV manufacturers at CES wasn’t just 3DTV. Instead we saw the top brands competing to bring us the largest screen size possible. Samsung and HiSense stood out by showcasing impressive 110“ displays complete with Ultra-HD whilst LG, Panasonic and Sharp all unveiled new models ranging from 55” to 80”.

Picture quality is of course equally important and visitors to the show were able to see OLED and 4K Ultra HD taking centre stage with four times the pixels of HDTV and twice the resolution. Competing with OLED was Sharp’s IGZO (Indium Gallium Zinc Oxide) image technology which also offered 4K Ultra-HD and superb energy efficiency to its LCD range.

It was encouraging to see both Panasonic and Samsung launching new smart TV interfaces, features included voice and movement recognition, individual recognition to personalise the TV home-screen and split screen capability allowing users to do view things at once.

Prototypes like 8K display and curved TVs also grabbed attention which is no mean feat at the world's biggest gadget show.

85% of flat-panel TVs getting smart

A recent report by Gartner indicates that the production of smart TVs is growing rapidly, with smart TVs predicted to make up nearly 85% of the flatscreen TVs produced in 2016.  On the face of it, this isn’t a big surprise – smart TVs have been dominant in the high-end TV market for the last couple of years and, as always, what starts off as a high-end feature gradually makes its way into all models in the range.  There is also the need to keep the user experience fresh for consumers over the lifetime of the product, and the economics of retail TV sales makes it difficult to justify over-the-air upgrades for TVs.  A one-off payment for a TV doesn’t cover the cost of upgrading that TV to add new features, and so making these new features available via a portal or other online service is attractive to the manufacturers.

Simply selling more smart TVs doesn’t mean that people will connect them, however: as we’ve discussed before on this blog, recent figures have shown the number of smart TVs rising, but the number of TVs being connected remains pretty flat and sales figures may not tell the whole story.  There are two main reasons for this.  The first is that it’s not always easy to get a network connection to the same place as your TV, although this could be solved through the use of Wi-Fi or powerline networking.  The second reason, and the one that is more difficult to solve, is that many people simply don’t see enough value in the services offered by a smart TV to want to use them.

This is often due to a combination of portals that are difficult to use, and apps that customers don’t see value in. It’s not simply about having the most services available on your TV: it’s about having the services that consumers care about, can find easily, and easily use to get what they want.  If manufacturers don’t improve the ease of use of these services, it’s likely that more smart TVs will remain unconnected.

Global Pay-TV will reach 907m in 2013

The global pay TV market saw strong growth in 2012, with nearly 47 million new subscribers taking the total size of the market to an estimated 864 million households. Over the same period, growth in digital terrestrial markets was relatively flat, indicating that even in tough economic conditions people are willing to pay to be entertained.

As always, content is king, and it’s likely that high-quality content and access to the most recent movie releases are what’s driving the growth of pay TV services.  However, as over-the-top service providers such as Netflix start to bid for this content as well, pay TV operators may need to revisit their strategy to look at how they can improve their offerings in order to remain competitive. While there’s no danger of pay TV services losing their dominant place in the industry just yet, the rapid growth of ITPV and over-the-top services is not something that pay TV operators can ignore.

Consumers are getting more demanding, and with increasing innovation from public service broadcasters and smart TV manufacturers, the pay TV operators will need to keep up with these trends.  Many pay TV operators are in a good place to do this, as we see in the UK with both Sky and Virgin launching major new features this year. Predictions that cable TV operators face growing pressure from IPTV mean that some operators may need to innovate more than others, though. Whether they are able to do that well enough remains to be seen.