We all know that multichannel video programming distributors (MVPDs) have been steadily losing customers in recent years. Estimates vary, but most experts agree that the percentage of U.S. households using traditional Pay TV has fallen below 60% since its peak of around 89% in 2009. According to SVB MofftetNathanson, Q1 of 2023 represented the largest quarterly decrease in Pay TV subscribers in over 7 years.
However, despite these headwinds, we see the potential for MVPDs to reduce losses and even grow if they make significant changes. Cable and satellite providers still maintain significant market share, and streaming services have been steadily increasing prices while reducing content availability.
MVPDs must focus on streamlining internal processes and improving the customer experience. Here we explore automation and innovation strategies that cable and satellite providers can employ to retain users and compete with streaming services.
Innovate to Prevent Cord Cutting
The Features Consumers Crave
To compete with streaming applications, MVPDs need to make their services convenient, accessible, and intuitive.
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 DTC streaming services like Netflix and Hulu could go a long way toward 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.
Consumers also want to be able to access content anywhere and everywhere. Most MVPDs are currently adding this capability by launching their own vMVPD services and mobile applications. The next step could be adding the ability to access saved shows and recordings from all devices and even save them for offline viewing.
Recording live TV has been an attractive feature for years, but not all MVPDs let you access recordings across different devices.
Bundling streaming services together with traditional cable channels—so that they can be accessed all in one place—would be a huge innovation that could make MVPDs an unshakeable force. Two-thirds of consumers without MVPD subscriptions say bundling SVODs into an MVPD set-top box increases the value proposition. Smart TVs are currently winning the battle for the entertainment hub of the home, but MVPDs still have a chance to win over existing customers. 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.
More User Choice
Millennial and Gen Z viewers are opting for less expensive alternatives and even sharing passwords whenever possible. Meanwhile, Gen X and Baby Boomers are feeling greater economic pressure, so all age groups strive to only pay only for what they need.
MVPDs should aim to reduce channel bloat and offer consumers affordable packages with the channels they care about. Plus, when consumers want to add a new channel, they should be able to do so without large bundle upgrades.
Innovate for the Right Viewers
Fewer and fewer Millennials and Gen Zers are watching traditional TV. These groups are consistently the most likely to be cord-cutters or cord-nevers, and this trend will likely continue. They aren’t just being pulled away from Pay TV by subscription-based streaming services—increasingly they are spending time watching videos on social media platforms and livestreams on platforms like Twitch and YouTube.
Baby Boomers are the most likely to keep enjoying their traditional cable TV, while Gen X —aging but still somewhat malleable — occupy an uncertain middle territory where they can still be susceptible to cord-cutting.
MVPDs may be best served spending their research and marketing dollars trying to understand and reach these older demographics. Then, when deciding which features to improve, they could focus on the developments that will help them best retain Gen X and Baby Boomer consumers.
Baby boomers are by far the most likely to watch traditional TV according to MarketingCharts.com
How Automation Can Keep Multi-channel Broadcasting Competitive
To operate seamlessly, MVPDs rely on a host of behind-the-scenes participants. There are program directors, advertising agencies, ad buyers, and ad delivery services. 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. Increasing automation can help streamline MVPDs and deliver efficiencies that help the bottom line.
There are a number of ways that MVPDs can maintain their competitive edge by automating their processes with the goal of enhancing the customer experience:
- Use modern analytics tools 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 accelerate 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 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 changes 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 is 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.
Conclusion
Due to increasing programming costs and pressure from Wall Street to demonstrate profitability, the price for OTT services will keep rising, which makes them vulnerable to competitors like MVPDs.
MVPDs have historically been growth focused instead of customer focused, but a shift in strategy is now necessary. The only way for MVPDs to compete with streaming services is to prioritize customer experience, with an eye toward retention. Innovative use of newer technologies, more flexible packages, and automation through the use of cloud-based services can help keep more customers satisfied for longer.
To learn how SymphonyAI Media empowers traditional linear content sellers, visit our Broadcast and Cable Solutions page.
