(Written in May, 2019)
While John Oliver was obviously only joking – is he ever not – about how the final curtain falling over Game-of-Thrones could only usher in the fatal demise of his employer HBO, he did put the finger on a real issue. The seasonal popularity fluctuation of the respective SVOD packages is leaving the consumer no choice but excessive bundle stacking or pirating. Let’s explore for a moment what the implications of this are for the main pay-TV stakeholders.
It is safe to say that OTT has gone well beyond its initial disruption to become a mainstream foundation of any modern TV operation. In this “post-OTT era”, two competing trends are playing a pivotal role in today’s TV landscape – content fragmentation and content (re-) aggregation.
Content fragmentation is currently the most commercially disruptive, and therefore the most visible, trend. As content owners and online aggregators continuously launch all sorts of D2C bundles, consumers are challenged to stack up. Stacking up is, sadly, the right image as the resulting pile is getting increasingly impressive.
Take your basic channel line-up (the degree to which it is “skinny” is largely a matter of regional perspective) and let’s add on Netflix, Amazon Prime (even if the main driver for that is getting your sports gear shipped for free) and Hulu. But, Game of Thrones is on HBO so let’s add that as well. And then there is the Disney+ offering. In addition to satisfying your nostalgia for Star Wars, it features all the Marvel superheroes you can imagine while impressively serving as an effective child sedation tactic on a rainy Sunday morning. Already an impressive stack, we have not yet considered Apple TV+ or addressed the massive plethora of offering in sports.
While daunting, this buffet of options is great news. It illustrates once more that we have never been so spoiled in terms of quality content. The uptake of these D2C services also underscores a buying propensity for content, which is good news for the media & entertainment industry at large.
However, at what point is too much just too much? We may be heading for a “fragmentation tipping point” where consumers are not only getting overwhelmed and frustrated from navigating through a raft of content silos, but also must contend with the expensive bundle that de facto emerges from all this stacking without a bundling discount. (A conundrum also very well captured in a recent Forbes article by Alan Wolk.)
This is where the pendulum might start to swing back to re-aggregation, but only if pay-TV operators step up to the plate in an endeavour to assume a super-aggregator role. In principle this should be the area where they can leverage their core expertise to really shine. After all, meaningful content aggregation has been the very reason for pay-TV in the first place.
Such super-aggregation does, however, require some fundamental rethinking of the offering and its implementation. That is, we have to be careful not to confuse super-aggregation with a complacent “business as usual” approach of absorbing all relevant content into one single catalogue accessed through one monolithic user experience.
In case you were already wondering, this is where the chocolate comes in. Different chocolate treats correspond to different levels of super-aggregation.
1. A jar of M&Ms
In the first and most basic approach to super-aggregation, the operator is content with a mere HDMI-1 integration. Like a jar of M&Ms, it’s a no-frills approach to address the need to aggregate.
In this case, all OTT bundles and their applications are simply living alongside each other on a single consumer OTT device, which could be offered in a BYOD model. Examples include a smart TV, a Roku box, a Fire TV or an Android TV STB if the operator wants to bring a branded UI to glue it all together.
While this hardly qualifies as super-aggregation, there is no reason to be condescending about it. It may well fit the business objective of an operator who is solely focused on broadband and does not need a lot of additional differentiation for that to be successful.
Establishing a baseline that easily onboards the relevant OTT bouquets could also form a solid foundation to then move to the next level.
2. Layered chocolate mousse cake
When discussing real super-aggregation worthy of the name now, we move forward with a more refined, chocolate dessert.
Subscribers essentially want to effortlessly search for and consume content through a simple, uncluttered and engaging interface, regardless of the source. However, that source is ultimately going to be very visible – much like a layered chocolate mousse cake. Therefore, if operators are serious about becoming the go-to super-aggregators in an OTT world, they should primarily master efficient OTT content on-boarding by smartly harnessing the existing OTT bouquets and their apps as appropriate.
At the very least, this requires some sort of a navigator app providing features, such as single sign-on, cross-application search and (somewhat) deep linking into the metadata of the underlying OTT bouquets.
3. Layered chocolate mousse cake with added toppings and extras
One can go further along this path by taking one’s own catalogue and its UI as the anchor point for integrating the respective OTT bouquets and their apps. This creates an even more integrated interface to an OTT line-up.
In our chocolate metaphor, the over-arching operator portal app can range from being a subtle topping, to being the predominant flavour representing most of the cake with the OTT add-on bouquets as strawberries on the bottom (see picture).
The deeper the integration is done and the more efficient the deep linking is implemented, the more effectively the operator can realise so called “active content monetization”. This is done through data-driven, AI-assisted catalogue curation and promotion for the existing catalogue while leveraging the OTT add-ons for completeness, convenience and, ultimately, consumer loyalty.
This approach, however, pre-supposes a certain bargaining power with the OTT content providers, and therefore requires significant business clout and size. This size-induced bargaining power is also indispensable to achieve any meaningful bundling discount on the OTT bouquets.
From the above it should be clear that the “chocolate level” of super-aggregation an operator finally achieves will be gauged by many factors. This starts with the TV centricity of the operator’s business strategy, including the overall clout and financial means of the service provider.
But by the same token, it is also important to note that even with all the imaginable means, no one is likely to ever again reach the old situation of one single operator-branded catalogue accessible through a single monolithic UI, equivalent to homogeneous chocolate mousse.
The successful super-aggregator will instead learn how to strike a shrewd balance between low-touch onboarding of OTT bouquets, while still providing a coherent user experience through an overarching UI that delivers unified search and deep linking into a modular collection of OTT bouquets and their respective apps.
The window of opportunity to play this role is, however, now. Pay-TV operators must not complacently consider themselves the only candidate super-aggregators. OTT-centric platform players could credibly assume the same role, especially if they converge it around a compelling consumer device. Amazon obviously comes to mind as a universal digital retailer. However, it will also be interesting to observe how Apple ends up blending their new Apple TV+ OTT offer with other packages.
If reading this has resulted in a little craving for chocolate I sincerely apologize. However, much like the chocolate levels, all levels of aggregation could be a good choice depending on your situation. The key point is to pick one and move forward to come out ahead.