Interviews, insight & analysis on digital media & marketing

Have telcos reached a streaming equilibrium? 

by Eamonn Armstrong, Senior Director of Product Management, MediaKind 

Streaming has forever changed how we consume content – from TV and music to news and gaming. This shift is perhaps most evident within the media industry, whereby the migration of traditional Pay-TV customers towards streaming platforms highlights the growing consumer preference for digital mediums. It’s a trend that’s now extending across the media landscape into areas such as live sports – and it’s happening in a big way. The recent announcement from Apple TV and Major League Soccer (MLS) – a 10-year global streaming deal worth approximately $2.5 billion – is just the latest strategic investment in this new digital era and another example of the fierce competition between media companies today.

So as the big technology giants invest heavily into new content and services to expand their digital audiences, what role can the telcos and traditional pay-TV operators play moving forward? On the surface, there is a big opportunity. There are numerous benefits for telcos and TV operators looking to embrace streaming within their entertainment packages, not least in heightening their consumer offering and increasing revenue potential. However, to survive in a world of giants and keep the sales engine turning, they must embrace new technologies, partner with larger players, and develop new value propositions.

The pay-TV landscape today 

One of the biggest opportunities available to telcos and TV operators is to transcend the vital role of content aggregators by delivering a unified platform for consumers to enjoy a variety of content sources. While they work towards achieving this technologically and operationally, analyst insights are shedding increasing light on telco and TV operator revenues. Digital TV research recently reported that pay-TV revenues are forecasted to decline by $25 billion between 2021-2027. Although the same research shows there will be an addition of 19 million more pay-TV subscribers in this period, it nonetheless paints a troubling picture for the market. 

Data points such as this reinforce that while linear pay-TV services from operators will continue to be the majority means by which content is consumed, significant recalibrations in how they market their services and reach consumers must evolve. Live content, particularly news, entertainment, and sport, remains the mainstay of pay-TV offerings, and these represent the highest value content.

The ongoing trajectory to a streaming-first future has led many telcos and TV operators to change their focuses in recent years. Network operators now see broadband as the main source of profitability, but customers taking pure broadband packages have higher churn levels than those who take a video service. In other words, video services are also a useful means to increase the ‘stickiness’ of their subscribers. In this context, telcos and TV operators need to embrace the new streaming services while providing an aggregated video service that keeps customers loyal and increases their cost-efficiency to optimize the profitability of the video service itself.

Virtual media players in the cloud 

Telcos and TV operators have one other card to play – which could help guide them towards future success. The combination of traditional linear TV with streaming offerings provides a dynamic environment where viewers can experience content on their own terms. This platform type is known as a vMPVD (virtual multichannel video programming distributor), and they are already making their presence felt through platforms such as DirecTV Now, Hulu Live, and YouTube TV. 

Some telcos and TV operators have already seen the benefit of embracing cloud-based solutions to provide their customers with a great TV experience. The adoption of streaming services has shifted user expectations toward what an engaging and easy-to-use media offering should be capable of. For the provider, there’s the opportunity to make their service more flexible and accessible, provide greater reach, and be more cost-efficient in delivery. There’s a lot to like!

Telcos and TV operators have been shifting their pay-TV offerings to provide content line-ups on a wider set of devices and users. They achieve this by using streaming technology to provide new market offerings such as streaming-only services. Their strong relationships with content owners and their subscribers put them in the perfect position to offer a complete range of content and become true super-aggregators for all media. 

So, this beckons the question – are we reaching a market equilibrium where telcos and TV operators have met their match with content providers? Or does the all-important counterbalance lie elsewhere?