How Can Pay-TV Providers Convert Customers into Loyal Stream | Vlocity - Industry Cloud Apps

How Can Pay-TV Providers Convert Customers into Loyal Streaming Subscribers?

The customer is now in control.

Apr 1, 2020 by Christopher S. Dean
VP / GM Media & Entertainment
4 minute read in Media & Entertainment
How Can Pay-TV Providers Convert Customers into Loyal Stream

By Christopher S. Dean, VlocityVice President and General Manager of Media & Entertainment. Originally posted via TVTechnology.

Cable and satellite providers may be losing big, but they are thriving in equal measure with streaming and nontraditional offerings.

According to recently released numbers, the number of AT&T’s Spectrum residential video customers decreased by 177,000 in the third quarter of 2019, then surged with 331,000 new digital customers in the fourth. At Comcast, there’s a similar trend: 238,000 cable subscribers lost in Q3; 379,000 subscribers gained for its high-speed Xfinity internet service.

What these numbers show is that despite year-over-year pay-TV losses and the first-ever down year for Dish’s Sling TV streaming service, retention and reinvention are not exclusive concepts. They are simultaneous processes that demand creativity, agility and the right set of tools.

For incumbent providers, understanding the rules that govern the new landscape requires they dispense with legacy business models and the corresponding attitudes. As seen in the following examples, the focus for retention should be what’s working, what’s not and how the same technology empowering Netflix, Hulu, Disney+ and other new market entrants is being successfully adapted by pay-TV companies.

The focus for retention should be what’s working, what’s not and how the same technology empowering Netflix, Hulu, Disney+ and other new market entrants is being successfully adapted by pay-TV companies.

PERSONALIZED CONTENT

There isn’t a better bundle. There is only an intimate understanding between provider and customer. In place of the 500-channel chasm where subscribers are asked to find their own way, the new landscape empowers with 1:1 relevance: Subscribers customize their offering, and thereafter receive personalized messages recommending new content and services based on those preferences.

Comcast’s Xfinity Flex offers a good example of how to proceed. Launched in September 2019, the service gave away a 4K-capable set-top to broadband-only customers for free, creating a surge of interest among those looking for a low-cost streaming alternative and one that offers access to movies and TV along with premium subscriptions such as HBO, Showtime, Netflix and Amazon Prime TV. Best of all, the service is delivered via a single-input interface.

The lesson for incumbents is that without putting the subscriber at the center of the offering, retention isn’t possible. Incumbents no longer have the luxury of letting the content do all the work and relying on decades-old technology to handle the delivery. Retention means reinvention from the inside-out as incumbents compete with both fellow pay-TV providers and streaming-natives like Amazon’s Fire TV and Roku.

PERSONALIZED SERVICES 

Subscribers today expect seamless personalized omnichannel experiences so retention doesn’t stop at the set-top-box. Among incumbent providers, Altice USA has been particularly adept at embracing omnichannel demand. Along with their Altice One streaming offering, they also allow subscribers to choose from mobile packages, connected home, Wi-Fi hotspots, even intelligent voice, which combines Amazon Alexa with high-fidelity audio.

Comcast also deserves mention on the platform front, because along with breadth of service, they allow for customization according to usage. While other providers offer two or three levels, Comcast has seven—empowering subscribers to pick the offering that best fits their household, be it a large-family situation or one comprised of hardcore gamers switching between multiple platforms.

The lesson is that if you allow customers to customize the package that delivers the best value for their needs, the better the chance at keeping them as a subscriber.

The lesson is that if you allow customers to customize the package that delivers the best value for their needs, the better the chance at keeping them as a subscriber.

 

PERSONALIZED BILLING 

The “last-mile” isn’t delivery. For incumbents concerned with retention, personalization means allowing subscribers to choose the terms of when and how they pay for services.

Like the channel bundle, the monthly bill has been the standard. But for today’s customers trained on the micro-payment capabilities of Venmo and the per-use model of Uber and Lyft, incumbent providers must address expectations for such billing flexibility.

Among the providers excelling on this front, Verizon and Comcast have pay-as-you-go internet offerings that give subscribers the option to renew or cancel at any time. And in what is perhaps the most granular service on the market, Comcast even offers a seven-day internet refill for $15.

The lesson is that while pay-as-you-go is typically marketed to consumers who don’t qualify for postpaid service or who don't have access to banking services, it demonstrates a flexibility incumbents should apply to all segments of their subscribers.

PERSONALIZED STACK

The biggest challenge pay-TV incumbents face is choosing the right technology to compete in the new streaming landscape. For many, the problem is legacy and homegrown systems that were designed to deliver incremental value, not pivot at a moment’s notice to deliver hyper-customized offerings.

In place of on-premise, siloed offerings, the new technology stack is built with cloud-based tools. The chief advantage is speed and agility, since the cloud gives providers a single platform to manage rollout from launch to revenue.

Cloud technology also gives providers greater customer engagement than their legacy platforms deliver. With new market disruptors priding themselves on personalized content and dynamic pricing, pay-TV providers must deliver similar offers to retain subscribers and attract new ones.

Cloud technology provides such intelligence on demand, while legacy systems are more inflexible and limit providers to generic offers. Cloud technology embeds such intelligence, while legacy systems limit providers to generic offers, which can strike the customer as evidence that their pay-TV company is a corporate behemoth that has no idea who they are.

For instance, anyone who has ever gotten an email from their cable company enticing them to watch the same movie they watched the previous night knows what such a disconnect does to the provider’s brand perception. Netflix and Amazon set the bar to establish consumer expectations in today’s market for personalized offers.

Among the incumbent providers, managing upgrade and downgrade cycles for video will only become more important in today’s streaming wars. Comcast’s acquisition of Xumo in February only reinforces the need to have SVOD, AVOD and TVOD assets to manage the subscriber lifecycle. 

Among the incumbent providers, managing upgrade and downgrade cycles for video will only become more important in today’s streaming wars.

 

And on the consumer service front, Comcast stands apart in its use of cloud technology to bring agility and interoperability to its offering. The company acquired Xumo, a live and ad-supported streaming service, to leverage its Xfinity offering. Further, Comcast recently announced a partnership with Pivotal that will allow the company to leverage artificial intelligence (AI) and machine learning technologies for self-managed subscriber experiences.

Similarly, Charter Communications’ recent investment in Comcast-backed Plume will bring smarter Wi-Fi to the home. Also notable is Altice’s new Apple TV app that gives Apple TV subscribers access to Altice USA’s live TV services, VoD and cloud DVR recording offerings.

For traditional providers struggling with retention, here is the bottom line: there is no plug-and-play solution that will put them magically back on top. But with an agile, cloud-based offering, informed by user preference and leveraging the efficiencies of an omnichannel platform, loss can be transformed into immediate gain and an investment in sustained, long-term growth.

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