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Can Pay TV Adapt?

Twitter is on a tear. The social network grew 38.9% year-over-year (compared with 18.1% for Facebook) and the share price has soared 60% in the last 30 days. The surprising source of this internet euphoria…television. Twitter’s higher engagement and targeted TV ad suite could siphon some of the money that is currently going to Pay TV. Now the operators are scrambling to launch their own 2-Screen and authenticated TV Everywhere tools and several Israeli companies are hastening the transition.

 
Twitter, Netflix, Amazon and other players bring richer engagement to the viewing experience. This is finally beginning to show up in the bottom line. TV Everywhere was announced in 2009 but was very slow to reach the roughly 105 million multichannel TV households in America. There simply was not a strong economic incentive for operators, who saw average revenue per user climb by more than 5% a year from 2005 to 2010, from $59.82 to $77.43 per month (Bernstein Research). There is now. Pay TV penetration in the US slipped to 80% of households last quarter. In fact, there are now 5.5 million “zero TV” households in the US, up from 2 million in 2007 (Nielsen). Suddenly, Pay TV operators are embracing TV Everywhere and other engagement tools. “Guilty as charged”, admitted Comcast CEO Brian Roberts at this year’s CTAM conference. By year’s end, 60 percent of US Pay-TV subscribers will have access to TV Everywhere, a 33 per cent increase from March (TDG).
 
What Consumers Expect of Their TV
 Click here for link to this infographic
 
Franco-Israeli player Viaccess-Orca is helping Pay TV operators address the 2-Screen consumer with its DEEP product.  Winner of the “Best Content Platform of the Year” award at IBC this year, DEEP automatically creates digital magazines related to the video content on second-screen devices. “The value is related to engagement” says CEO Francois Moreau de Saint Martin. “Operators have to find ways to differentiate”. The company, a presenter at last year’s Marketing & Ad:Tech Israel conference, is also integrating brands into the experience with a customized digital magazine. 
 
 
 
Other Israeli companies innovating in this space include Comigo, Screenz, Jinni, and social tools like Rounds. Although the US market is mature, Pay TV will still grow a respectable 3% globally this year to 895 million subscribers and USD 245 billion in revenue (ABI). The challenge for Pay TV operators will be to adapt their offering to the 2 Screen consumer. While TV is a very healthy business, these two screen vendors can provide their customers with advertising opportunities in the two fastest growing sectors, digital and mobile”. 
 
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