As more and more content is delivered over the Internet, consumers are “leaning forward:” moving from passively consuming content to designing their own viewing experiences. And, of course, the battle for the revenues to be gained from owning this experience has heated up. Pay-TV providers, who traditionally controlled the customer television experience, have found themselves under serious attack, and not just from over-the-top (OTT) players but also from device manufacturers and even from retailing giants like Walmart through the integration of its Vudu platform with connected consumer electronics.
So who will win the skirmish for the consumer’s wallet share? To provide the winning experience, you need a winning formula. If “E” stands for the customer “experience,” then the formula for success can be boiled down to “A+B+C+D = E.” Those who provide all the elements in this equation will find themselves best-placed to take advantage of the revolution in the connected-TV world.
“A” is for “access,” the first part of the equation. With the exponential growth in online viewing, someone needs to provide consumers with access, but access alone is not enough to win the customer-experience battle, because consumers for the most part are agnostic as to who provides their gateways to the Internet. “A” is also for "aggregation.” Consumers want personalized and relevant content. They need help in finding that content, now that it can come from myriad online sources and not just from a single video-content provider. Google has realized this and has built its Google TV concept around being the best video aggregator.
“B” is for “billing relationship.” In order to create a deep, loyal relationship with customers, a company first needs to know who they are and, second, to be in regular, ongoing communication with them. For Pay-TV providers, the monthly bill provides this. “B” is also for “business processes,” which need to be in place in order to monetize the viewing experience and to support the customer experience; the failure of the Google Nexus One handset shows what happens when these processes are lacking.
The Nexus One was a great phone with an advanced operating system — hundreds of free apps to download, all backed by Google — but it was missing the whole issue of support. Who do you phone if you have a question or problem?
“Consumers already are demonstrating they don’t care whether they get their broadband access from cable-TV companies or their pay television from telecommunication companies.”
“C” is for “content,” which is a crucial element in winning the battle. Customers value content and will pay for the content they want, which puts Pay-TV providers at an advantage with their exclusive content and broadcasting rights over such linear programming as live sporting events. Any new competitor will need to provide more than catch-up TV services and YouTube if they are to succeed in driving real revenues. And all this content needs to be available on an array of screens.
“D” is for “device.” Consumers want to access the content they want any time, anywhere and on any device. Companies like Netflix have ensured you can stream their content on more than 50 devices, and the BBC’s iPlayer has enjoyed great success via the Xbox and PS3. This provides a challenge for Pay-TV providers, whose traditional business model is based on just one device: the set-top box. And, finally, “D” is for “retail distribution.” As customers begin to consume more and more content across multiple devices, companies need to help ensure they reach the widest customer base. GoogleTV, for example, launched its device with Best Buy. Apple is selling the iPad not only via its stores, but also through AT&T, Verizon, Walmart and others. These companies understand that, in order to provide the winning experience in the home, they needed strong retail distribution ability.
So who will prevail in the new world of “TV Everywhere?” Consumers already are demonstrating they don’t care whether they get their broadband access from cable-TV companies or their pay television from telecommunication companies. In the second quarter of 2010, almost 100 percent of the net additions of broadband customers went to cable companies like Time Warner Cable. On the other hand, phone companies like AT&T and Verizon were responsible for almost 100 percent of the net Pay-TV customer additions. Consumers simply will give their business to the company that understands how to bring together the best content and services, and package and deliver it in the most exciting way while providing the most personal and intuitive experience.
In other words, A+B+C+D = E.
Dana Porter heads Amdocs Global Marketing. Contact her at Dana.Porter@amdocs.com.