Pay TV in the Multiverse of Madness: Taming the chaos with strategic technology choices

You don’t have to be a master of the mystic arts to know that streaming has brought unparalleled complexity to the world of Pay TV. With video consumption now taking place on a multiverse of devices, operators have seen dramatic change in everything from business models and daily operations to, naturally, the range of technologies in use. 

In fact, the landscape is so fragmented we now have a range of different “maps” to help visualise the chaos. You’ll probably be familiar with these ones from “Media Universe Cartographer” Evan Shapiro and our friends at Divitel: 

In the face of such dramatic change, there are difficult strategic decisions to make. Most existing Pay TV operators have embraced streaming (sometimes reluctantly) as a way to reach new devices like mobile phones and Smart TVs. Many more, including MVNOs like Youfone, have used streaming as their primary route into a market that was beyond their reach when it involved massive investment in cable or satellite infrastructure. 

Typically, operators are also looking at becoming content aggregators to cement their role at the heart of all family entertainment. Companies like our customers Waoo in Denmark and Telenor Sweden are leveraging Android TV to help them achieve this on their managed streaming devices. A side note: Isn’t it time to rename “set-top boxes” to “streaming devices” given that’s overwhelmingly (often exclusively) what they do these days? 

An ever-expanding universe

The reality is, the landscape is only going to get more complicated. Incredibly, new Smart TV operating systems are still being added to the existing crowded marketplace, and there’s little sign of consolidation coming in the near future. Ask any Pay TV CEO and they’ll tell you streaming has made their world more messy and more expensive, with a side order of frustrating delays in time to market. 

A map will only get you so far in this increasingly fragmented landscape. For really complex journeys, even experienced travellers will work with a specialist guide. I mean, even Netflix (surely streaming’s most experienced traveller?) is turning to Comcast, Roku and Google for help with implementing AVOD. 

The conversations I’m having with Pay TV operators from North America to North Africa make it clear that when it comes to technology choices, the industry is increasingly moving towards being two separate universes: those who invest heavily to have their expert guides in-house, and those who make the strategic decision to outsource the effort to external specialists. 

Doing everything in-house was never really an option for the newest, smallest operators. However, many medium-sized operators have continued to tread a middle ground – with some systems hosted and maintained in-house and others supplied as a managed service in the Cloud. But as our superhero friend Dr Strange could tell you, even a master of the mystic arts won’t find it much fun being stuck between two universes. 

Pay TV’s new “digital divide”

Looking ahead 5-10 years I think we’ll see the middle-ground becoming increasingly unsustainable. The bigger operators who have been in the market the longest will likely continue with their in-house approach, hosting their own infrastructure, buying-in software and middleware but performing a lot of their own software integration. They'll continue to only outsource certain specialist projects like Smart TV app development. But the squeeze of streaming competition will force almost everyone else to take an outsourced approach. It’s the only way to maintain what I like to call their “developocity” (development velocity). 

The rise of Android TV is the first step in this direction. While the idea of giving up a portion of your private data to Google was largely unthinkable ten years ago, many operators have since become willing to make this sacrifice in return for shortcutting the traditional 18-24 month development cycle for a new, content-aggregating STB. RDK, with apps built using the Lightning Framework, is increasingly challenging Android TV as a way to achieve this without getting “into bed” with Google. But the next true step towards developocity is TV as a Service. 

I believe that by 2030, the vast majority of operators will be outsourcing their entire Pay TV operations, eliminating their need to host any streaming infrastructure, and with it the need to staff a network operations centre (NOC) for their streaming services. They’ll move away from custom application development and towards configuration of off-the-shelf apps. They’ll move from today’s frustrated “we can’t do this ourselves” to a more pragmatic “we don’t want to do this ourselves”. 

How do we get there? 

For operators who already see this as their way forward, it can be difficult to know where to start. You won’t want to throw out everything you’ve got today and start again - you’ve invested in what you’ve got and no CEO or CFO likes wasted investment. The answer is to start thinking more strategically about how you tackle streaming fragmentation. Instead of treating each new Smart TV app or streaming feature (recommendations, ad-integrations etc.) as discrete projects to be tackled in isolation, it’s essential to take a more integrated view. If your long-term goal is to reduce complexity, costs and confusion, it makes sense to think long term about your technology choices. 

Want to know more about the benefits of TV as a Service? Read our whitepaper: “Pay TV doesn’t have to be painful.”

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By Dr Neale Foster, CEO at 24i