Skip to main content

How Pay-TV Providers Failed the A-la-carte Test

As consumers demanded greater flexibility and convenience in acquiring entertainment content, personalization of the user experience wasn't merely a nice-to-have feature -- it became a key requirement.

Unfortunately, most traditional pay-TV providers failed the test of providing more consumer-centric offerings. That mistake may prove to be deeply regrettable.

On-demand viewing of TV programs and movies in the U.S. will generate $10 billion dollars in online video annual revenue. In contrast, revenue from retail DVD video disc sales and rentals will continue in decline, with no future leveling in sight. Also, traditional pay-per-view service revenues are still flat across the board.

According to the latest In-Stat market assessment, there will be three growing on-demand video revenue streams:

- Transaction- Video-on-Demand (T-VOD) encompasses online TV rentals, pay-TV VOD rentals and pay-per-view.

- Subscription VOD (S-VOD) includes online video subscription services, premium TV channels, as well as free VOD with a pay-TV service.

- Electronic Sell-Through (EST) covers the purchase of TV and movie content, independent of subsequent content delivery methods.

The success of on demand electronic sell through (EST) will hinge primarily on the buy vs. rent decision. Realistically, EST cannot replace historic retail DVD video sales.

However, the migration of DVD rentals to online T-VOD services, will help fill this revenue gap. Subscription VOD will see the highest growth rate, but also the most intense competition.

"The transition to on-demand video does not mean that linear TV is coming to an end," according to Keith Nissen, Principal Analyst at In-Stat. "What we are seeing is the economics of the digital entertainment world have begun to shift. The future will be a hybrid ecosystem, made up of both linear TV and on-demand video revenue streams."

Pay-TV and broadcast TV services still generate the majority of the revenue, but both business models are currently under stress. On-demand viewing of video content, whether by transaction or subscription, is taking hold. In order to ensure the continuation of existing revenue streams, new value propositions must be created.

That said, many consumers demonstrated an interest in a-la-carte service offerings years ago. However, the incumbent pay-TV providers resisted the requirement. Now, it appears that those alienated consumers have found what they desire elsewhere. Even as providers show signs of a willingness to adapt to market requirements, it may already be too late to regain the trust of the marketplace. Only time will tell.

In-Stat's latest market study findings include:

- U.S. TV download revenue will more than triple between 2010 and 2014.

- Online a-la-carte rental of TV episodes will directly compete with online subscription TV services, such as Hulu Plus and Netflix, and may detrimentally impact the use of incumbent "TV Everywhere" services.

Popular posts from this blog

Mobility-as-a-Service Creates Disruptive Travel Options

Building on significant advances in big data, analytics, and the Internet of Things (IoT), more innovative transit service offerings aim to increase public transport ridership and reduce emissions or congestion within metropolitan areas. By providing these services through smartphone apps, the transit services also significantly increase user convenience, providing information on different human mobility offerings -- including public transport, ridesharing, and autonomous vehicles. Mobility-as-a-Service Market Development According to the latest market study by Juniper Research, Mobility-as-a-Service (MaaS) subscribers will generate $53 billion in revenue for MaaS platform providers by 2027 -- that's rising from $5.3 billion in 2021. Let's start with a basic definition. MaaS is the provision of multi-modal end-to-end travel services through single platforms, by which users can determine an optimal route and price. The study identified a monthly subscription model as key to incr

Robocall Mitigation Solutions to Halt Criminal Threats

If you answer the phone and hear a recorded message instead of a live person, it's likely a robocall. A robocall is a phone call that uses a computerized autodialer to deliver a pre-recorded message. In 2020, the U.S. Federal Trade Commission (FTC) received 2.8 million consumer complaints about robocalls. Offering solutions to robocalling and associated fraudulent business practices, computerized mitigation platforms are an integral part of the solution. Platforms that are focused on actionable systems to disrupt unsolicited and potentially criminal phone calls help telecom service providers and industry regulators. Issues of whether one-size-fits-all developments are sufficient to be effective across the spectrum need to be addressed, and whether a single telecom network operator working unilaterally with a third-party platform could compromise desired or mandatory industry-wide standards. Robocall Mitigation Market Development According to the latest worldwide market study by Jun

Why a Distributed Workforce will Raise Productivity

While most senior executives at progressive organizations have already evolved their human resource policies to accommodate employee desire for flexible working models, others still resist change. Unfortunately, many of the laggards are now experiencing the "Great Resignation" phenomenon. The global pandemic required business leaders to rethink when, where, and how their knowledge workers and front-line employees perform their work. Yet even with the ongoing pandemic recovery slowly underway, some organizations are still trying to determine their workforce approach. According to the latest worldwide market study and recent survey data from International Data Corporation (IDC), stability and geography will likely define the balance of future work strategies. Distributed Workforce Market Development On a global basis, physical office sites are expected to be the dominant location for work as legacy organizations eventually find themselves in a more stable environment. However,