The Streaming War is Heating Up: How Will MVPDs Stay Competitive and Get Ahead?
To operate seamlessly, multichannel video programming distributors (MVPDs) rely on a host of behind-the-scenes participants. Program directors decide which shows run and when they run. There are advertising agencies, ad buyers, and ad delivery services. There are partners who liaise between MVPDs (like Comcast or Bright House) and the delivery services that transfer ads from ad agencies to their channels. There are people at each MVPD station who receive My Pillow and Little Caesar’s advertisements and schedule them.
The amount of human effort expended to get favorite shows—and the advertising that supports them—on the air is surprising in this era of ever-increasing automation. Media may be one of the most disruptive industries around, but when it comes to the nuts and bolts of running multi-channel operations, the processes that keep things functioning smoothly are often astonishingly cumbersome and outdated.
Why is it, when the age of broadcast automation has been upon us for some time, that more companies are not automating their workflows?
For MVPDs, the Goal Should be Customer Retention
For any company in any industry, the goal is to grow the business and remain competitive and profitable. This is certainly no different for multichannel providers. Growing a business means first retaining existing customers.
With the advent of video streaming services like Hulu, Netflix and Prime Video, cable companies have been losing customers in a steady stream in recent years. As of May 2018, the penetration of traditional wired cable service in the US had reached a low of 49.4%.
To accommodate the burgeoning demand for streaming services, cable providers must make their services convenient and available to a public that often watches their favorite programs on phones or laptops.
Millennial and gen Z viewers are opting for less expensive alternatives, and they are also often saving on streaming services through illicit means like sharing passwords. But however they get access to services, these groups spend about a third of their viewing time streaming.
The only way for MVPDs to compete –or potentially partner–with streaming services is to prioritize customer experience, with an eye towards retention. Innovative use of newer technologies and automation through use of cloud-based services can help keep more customers satisfied for longer.
One of the biggest grievances that drives consumers away from MVPD services—especially top cord cutters like millennials—is a clunky and unwieldy interface. More intuitive user interfaces (UIs) offered by streaming services like Netflix and Hulu could go a long way towards promoting customer retention. Not only are these UIs much better to view and use, they offer conveniences like being able to organize programs for each viewer in the family.
As MVPDs begin to prioritize optimization of the customer experience by combining aesthetically pleasing UIs with capabilities like storing recorded shows in the cloud, more of the intended targeted audience will take notice. In addition, bundling services like Netflix, Amazon Video, and Hulu together with traditional cable channels—so that they can be accessed all in one place—could make MVPDs an unshakeable force. Compared with the option of combining several OTTs, the added convenience and ease would far outweigh any additional cost. People pay for simplicity and convenience. Additionally, MVPDs could consider partnering with technology and consumer electronics makers themselves to ease interoperability issues that stymie viewership.
How Broadcast Automation Can Keep Multi-channel Broadcasting Competitive
The days when cable providers were the only option may be long gone, but they do offer programming options that simply can’t be found elsewhere. And after all, baby boomers are a large demographic group who will most likely always favor traditional pay TV.
In addition to making the user experience more convenient and aesthetically pleasing, there are a number of ways that MVPDs can maintain their competitive edge by automating their processes with a goal of enhancing the customer experience:
- Use analytics and AI to measure network performance so that customer facing problems can be eliminated before they turn into larger issues.
- Take advantage of DevOps methodology to keep product development innovations ahead of the curve, again anticipating customer needs in advance.
- Use net promoter scores to gather useful data about customer expectations and sentiments and speed issue resolution.
- Embrace the move to virtualization. This puts a box in customers’ homes through which all services come from the cloud. The result for MVPDs is reduced costs and the ability to more easily offer innovative services. For example, virtual customer premises equipment (vCPE) allows providers to upgrade bandwidth or services without in-home visits or hardware replacements.
Most of these innovations accomplish their goal of enhancing the customer experience by anticipating needs before they arise and eliminating the need for lengthy calls and in-home repair appointments.
The kind of diligence that allows for consistent monitoring of systems and anticipates needs before they arise can be accomplished only through automation and AI-based strategies. Imagine the appeal of MVPDs if most repairs and upgrades could be made without having to make sure someone’s home a week from Monday to let in the technician? Better still if many issues could be addressed before the need for repairs even arises.
Cable Networks Must Innovate to Keep Viewers From “Cord Cutting”
Fewer and fewer Millennials and gen Zers are watching traditional TV, and this trend will probably continue. And they aren’t just being pulled away from these traditional channels by streaming services—increasingly they are also watching videos posted by friends or influencers on social media.
Baby Boomers are likely to keep enjoying their traditional cable TV, but groups like Gen X—aging but still somewhat malleable in this respect— occupy an uncertain middle territory where they can still be susceptible to the phenomenon of cord-cutting.
Once the exclusive province of Millennials, cord-cutting is the elimination of more expensive cable options in favor of lower-cost streaming services. And it’s a trend that is kicking traditional MVPDs right in the market share.
According to eMarketer, almost 58 million gen Xers had a cable TV subscription in 2019.
In order to maintain and perhaps even exceed these numbers in the future, MVPDs need to put aside older more laborious manual processes and look to automation to create a seamless experience for their customers.
Due to ever-increasing programming costs, the price for OTT services will keep rising, which makes them vulnerable to competitors like MVPDs who have a bigger budget to absorb these costs.
MVPDs have historically been growth focused instead of customer focused but now that consumers have more choices, a shift in strategy is necessary. Many consumers—especially gen Xers caught in the middle of the baby boomers and millennials—will be willing to pay more for streamlined, beautiful, user-friendly, and convenient automated services.