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The Battle Between Pay TV And OTT

The upward trend in the amount of time spent viewing content on OTT services is showing no signs of slowing. It’s important to consider why viewers are attracted to providers such as Netflix and Hulu and what lessons Pay TV providers can learn. While it’s true that an average Netflix viewer watches 1 hour and 33 minutes of content each day, compared to an average 2 hours 30 minutes watched by Pay TV viewers, the figures for OTT viewing are increasing while the figures for Pay TV viewing are decreasing. Pay TV providers need to address this.

Another interesting fact is that 92% of Netflix subscribers say they are satisfied with the service, compared to 76% of Pay TV subscribers. So what is it that Netflix is doing right, and how can Pay TV providers adjust their practices accordingly?

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Netflix uses data to understand its subscribers

Netflix invests a huge amount of money and effort into collating data that helps it to understand subscribers. This means it can personalise content as necessary and acquire content that it knows appeals to its audience. Netflix estimates that the personalisation aspect leads to approximately 75% of views.

The biggest advantage that Netflix has is not in the amount of data it has but in its ability to access it. Pay TV providers also hold vast amounts of data but it often helps in silos; this makes it difficult to access and use effectively.

The difference in content

Interestingly, although Netflix provides subscribers with access to a large selection of movies and TV shows, Pay TV providers actually hold the most valuable content, such as live TV, video on demand (VOD) and pay per view. Typically the TV content that Netflix offers is a season or two behind what is showing on Pay TV.

The wide range of content available from Pay TV subscribers is indicated by figures from Gracenote, the music and video content technology provider. According to these figures, an average Pay TV provider will offer around 26,000 pieces of content on linear TV each week. This is in addition to around 450 sports events, concerts and news programmes. They will also provide around 13,500 pieces of VOD content. Compare these figures to Netflix which offers around 4,000 movies, 35,000 TV episodes and 500 other programmes.

The choice of content provided by Pay TV is wider but it’s still losing ground to Netflix. This is because Netflix knows how to use the data it has to its advantage and Pay TV providers have not optimized data use as yet.

pay tvThe difference personalisation can make

It’s obvious that using its data to personalise content is helping Netflix to reap rewards. The problem with Pay TV is that the EPG Grid remains, although there has been some movement away from it with TV Everywhere. This is not an advantageous situation when people are becoming more and more used to personalised navigation in online content that is delivered in carousels. Due to the restrictions of the grid the linear TV navigation experience is far less simple and enjoyable. The Grid has not evolved but carousels have. They used to provide the same content to all, but now they can be run using relevant data, improving personalisation and making them more dynamic.

Adopting this approach would greatly improve the position of Pay TV providers. Their breadth of content availability could enable them to be in a far more powerful position than OTT providers such as Netflix, if they could evolve.

There are many hurdles for Pay TV providers to overcome, in order to stem the tide of viewers watching more OTT content. They need to be able to move towards the OTT methods of personalising the viewer experience and raise their subscriber satisfaction levels to reach those of Netflix.

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