Pay TV operators are beginning to step up to the SVOD aggregator role in the US and Europe. However, a common approach is to “on-board” only select services, an approach not sustainable in the long term.
European operators positioning as SVOD aggregators
European pay TV operators are joining US providers like Comcast and Charter, by integrating popular SVOD services into the set-top box experience. Speaking at Cable Congress in Ireland last week, Manuel Cubero, Chief Commercial Office at Kabel Deutschland, said:
“We see ourselves as aggregators of SVOD services as well as TV channels. Twenty years ago we were an aggregator of channels, and increasingly we are becoming an aggregator of SVOD. With GigaTV, we try to offer an integrated product. We have the public and private broadcasters, the pay channels and SVOD.”
Tom Mockeridge, Virgin Media CEO, said his company was also embracing the role as SVOD integrator. Virgin Media was one of the first operators to put Netflix on the pay TV set-top box. However, he ruled out embracing Amazon:
“Amazon is a terrific business but fundamentally they are a retailer, and we are a retail business.”
His caution about Amazon is entirely justified. Amazon Prime Video is a simple SVOD service and could comfortably sit side-by-side with Netflix on Virgin’s STB without stirring any competitive issues. Amazon Channels, a built-in feature of Prime Video, is another matter entirely. Channels allows Prime members to subscribe to hundreds of SVOD services and linear television channels a la carte. In other words, Amazon is acting as an aggregator of SVOD services in the same way as Virgin Media is.
Even though Amazon is competitive with pay TV’s core product, blocking it could be counterproductive in the end.
Consumers do not want curation; they want assistance
Last week, Hub Entertainment Research released new data which explored how consumers were dealing with many different sources of TV entertainment. As a solution to the complexity of finding something to watch, Hub asked if consumers would prefer all their services from a single source. A third of the sample group said that they would prefer a single source. The Hub data indicates there is a potential opportunity for pay TV operators fulfill the ‘single-source’ role at the television.
However, this does not mean people want pay TV operators to curate which services they can and cannot access. Far from it. They will continue to signup for and use any service that interests them through connected devices like PCs and smartphones. What they need on the television is someone to make it easy to access and search the services that they have.
Two problems with Pay TVs current aggregation approach
Failing to support a key service like Amazon at the television devalues the SVOD aggregation function’s value to customers. The millions that use Amazon, or another service their operator does not support, will be driven to other platforms that also want to be the aggregator of services at the television. For example, Roku and Android smart TVs and streaming media players both have advanced search and voice capabilities and don’t bar any service from their platforms.
Some operators do not plan to restrict SVOD services on their STB. Mr. Cubero says:
“We will continue to add more. We want to bring them all in. It is a commercial strategy.”
However, they will struggle to ‘on-board’ all SVOD services to their GigaTV platform in a timely fashion. Again, this is problematic as consumers have instant access to services through their phones and the most popular TV platforms. The only way operators can keep up is by adopting an open platform to run their set-top box.
If you are at NAB 2018, I will be leading a discussion with a panel of experts of how operators. The session The Power of Voice: How Android TV is transforming the user experience will look at how operators can use Android TV Operator Edition to bring together the web and pay TV worlds.
Why it matters
Pay TV operators in the US and Europe want to aggregate SVOD services for their customers
Some operators plan only to integrate certain SVOD services they deem appropriate.
Most operators do not have an open platform at the STB making it hard to integrate new SVOD services.
These two problems will hinder pay TV operators’ ability to be effective SVOD aggregators.
 Kabel Deutschland owns Vodafone, and GigaTV is Vodafone’s set-top box/gateway.