Pay-TV Operators Can Stave Off OTT Threat with Multiscreen and CDN Investments

Wednesday, April 17, 2013 9:00 am EDT

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LONDON
"If a pay-TV operator is facing competition from Netflix, multiscreen represents the first step in fending off the competitive threat"

LONDON (April 17, 2013)—Despite the dire competitive threat posed by over-the-top (OTT) services, pay-TV operators can thrive by investing in additional service offerings that should include multiscreen services to more than make up for the erosion in their customer base, according to the IHS Screen Digest TV Intelligence Service from information and analytics provider IHS (NYSE: IHS).

Speaking here today at the IHS PEVE Entertainment 2013 Conference, Guy Bisson, research director for television at IHS, noted that although European cable operators have lost 1.4 million households, they have gained 17.8 more revenue-generating units (RGUs), during the five-year period from 2007 through 2012.

While cable operators in Europe and other regions are expected to lose more households in the coming years, RGUs will continue to increase, driving revenue growth for the industry. The attached figure presents the IHS history and forecast of cable households and RGUs for the 27 countries of the European Union.

“The pay-TV industry today is facing an increasingly competitive environment that is not helped by the recent entrance of platform-agnostic OTT services like Netflix, Amazon and others,” Bisson told the audience at PEVE. “To stave off this threat, pay-TV operators during the past few years have been offering services based on the triple-play of television, Internet and telephony. However, operators now need to offer new services, including mobile telephony, Wi-Fi access outside of the home and multiscreen, OTT-like access to video on the move. These services will be required for pay-TV operators to continue cultivating new RGUs in the future.”

Multiscreen represents a particularly effective means of competing with OTT.

“If a pay-TV operator is facing competition from Netflix, multiscreen represents the first step in fending off the competitive threat,” Bisson said. “By making pay-TV less TV-centric—i.e., allowing access on tablets, laptops and smartphones, and enabling TV to be moved around the house and on the road—multiscreen becomes an attractive alternative to OTT. However, to deliver multiscreen content effectively, pay-TV operators will have to take the next step, investing in their own content-delivery networks (CDN).”

A CDN is an Internet-based network that uses servers to deliver video content to users with high availability and high performance. “Embracing the CDN will become increasingly important for pay-TV operators as a means of delivering mass-market television to multiple platforms over the Internet,” Bisson said. “As operators add multiscreen services to their portfolios, building CDNs makes sense and allows them to transition their operations into a lucrative new area. By doing this, pay-TV operators can transform the Internet from a threat into an opportunity as well as open up new business opportunities by servicing the content distribution needs of their content partners.”

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About IHS (www.ihs.com)

IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs more than 6,000 people in 31 countries around the world.

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