As online video becomes increasingly popular, one notable area is lagging behind – the ability of the pay-TV industry to match that growth with complementary consumer-friendly services.

Already three to four years in the making in the US, providing pay-TV subscribers with viewing options on PCs and mobile devices as well as TVs – multiscreen access commonly known as TV Everywhere – has been big on promise but short on delivery so far.

“We need to create a more holistic experience that really delivers on that promise of being able to find what you want, where you want, when you want,” said Chase Carey, president and COO of media major News Corp, speaking at the recent Asia Pacific Operators Summit (APOS) in Bali.

“It’s too choppy, each distributor has their own version, the authentication process is too cumbersome,” he added. “Ease of use is tremendously important.”

TV Everywhere is starting to gain traction in Asia-Pacific too, mostly among operators with large content libraries of their own, including CJ in Korea, Astro in Malaysia, Foxtel in Australia and Now TV in Hong Kong.

As of last year, deals between operators and third-party content providers such as Fox and HBO are also becoming more common, as broadband penetration, as well as related piracy, grows.

Elusive consensus

Coming to a consensus on what must be done, however, isn't easy.

The pay-TV business is a lively place where clashing cultures between engineers and content creators can make it difficult to win over consumers.

Carey, who led US DTH operator Direct TV through a period of sustained growth a decade ago after implementing a consumer-oriented approach, feels both platforms and content providers are responsible for the current state of affairs.

“This is not just blaming the distributors,” he said, speaking in the opening keynote session at APOS, an annual meet organized by Media Partners Asia (MPA), the publisher of Media Business Asia.

“The content side of the equation needs to provide a consistent content experience,” he added.

“For the consumer, there is an aspect of easy to use, but there’s also an aspect of knowing what you’re going to get when you go there.”

A new way to pay

As pay-TV penetration grows, with the near-saturated US market a prime example, the ability to look through the eyes of a consumer is becoming increasingly important to unlock incremental growth.

Demand for a different kind of pay-TV in the US is fueling the rise of alternatives piggybacking broadband pipes, from slimmed down and more affordable options such as Netflix and Hulu Plus to more premium offers from the likes of Intel and potentially Apple.

Whether these represent head-to-head competition with pay-TV incumbents, or battles for emerging new areas of consumer spend, is debatable.

Nonetheless, evidence of willingness to pay is undeniable. Netflix, which has just started its next phase of evolutionary development with its first original productions, now has more subscribers than AOL, the exemplar of the first wave of internet development, ever had.

Incumbent attitudes to these upstarts are also changing, especially as Netflix becomes more focused with its content investments, positioning itself as an addition rather than a replacement to the pay-TV ecosystem.

The success of these new entrants as well as the popularity of video-friendly tablet computers, both happening at a pace unforeseen by the TV industry at large, has turned attention towards the industry's own efforts to come up with solutions from within.

“I see a great deal of insecurity in the business that I haven’t seen in many years,” remarked Kevin MacLellan, president of international television for NBCUniversal, now part of cable giant Comcast.

“I think it’s because we don’t really know what the mix of services, content and price is going to be,” he added.

The fear of creating precedents around new windows and revenue streams is holding up progress, MacLellan suggested, with justifiable concern arising from the outcome of some deals in the past.

“There are times where we’ve collaborated and worked well together but our gut reaction is typically to move back into our separate silos,” said MacLellan, also speaking at APOS.

“That’s what I see happening now, in the face of the uncertainty in the market.”

A recent 10-year pact inked by Comcast and Disney in the US, the largest and most expansive deal of its kind for both parties, succeeded in part because of an inbuilt flexibility, MacLellan suggested.

“It was a lot of work, six months of trusting each and setting precedents,” he said. “But if it doesn’t work, we need to have an adjustable model that will work for both of us.”

Nonetheless, while moving slower than hoped, TV Everywhere services are on the right track, MacLellan noted, echoing earlier optimism voiced by Carey.

The current model for pay-TV is resilient enough to withstand likely short-term marketplace shifts, giving operators and content providers the time they need to work out new relationships, both with each other as well as up-and-coming new players.

Urgent priorities

However, there are two pressing areas where the industry remains more vulnerable: finding a way to sell advertising around multiscreen services, and raising the perceived value of content from a consumer point of view.

Both are key to the dual revenue model that has sustained pay-TV in the past, and are likely to become even more important as broadband fosters more competition for consumer attention in the future.

While the pay-TV industry has responded to the market realities of a connected world with new pricing and portability options, incubments will need to do more to fund winning content in a world of abundant choice.

There has been some progress. Recent advances in fingerprinting and watermarking technology should make it easier to tap ad revenue across multiple devices, a tough industry-wide challenge facing buyers and sellers of adspace alike.

However, the critical task of persuading consumers that high-quality content is worth paying for, undermined by the evolution of piracy from a physical to a digital business, urgently needs more attention.

This is the key issue, MacLellan argued, one that will force distributors and content owners to work together.

The industry often pays lip service to the value of content, but more needs to be done.

“This strategy we’ve implemented hasn’t been a terrible thing, but it’s not the long game,” MacLellan said. “It’s not what’s going to work for us in the future.”

Content costs per sub are an inescapable issue, especially in the relatively mature US market.

The industry needs to be constructive about that.

“What we really need to do, is figure out how to continue to enhance the experience for consumers,” Carey noted during his APOS keynote session.

“It is still a market where there is room to grow and add to it, whether that’s through targeted advertising, or mobility or TV Everywhere, or an array of products where you continue to add dimensions and richness to that product,” he added.

“That should be our focus.”