Pay-TV crucial in creating quality content for digital television era

By Kingori Choto

The recent announcement by the government that December 13 this year will mark the commencement date of Kenya’s switch off from analogue to digital television broadcasting signal is likely to generate renewed interest in the pay-TV model as the country approaches this technological migration.

Globally, the migration to digital broadcasting has spawned a rapid uptake of digital television services, consequently hiking demand for high quality content. This unfolding scenario has opened a huge opportunity for paid television providers to offer increasingly content-hungry consumers quality programming. For this reason, the pay-TV industry is poised to play a pre-eminent role in the unfolding digital TV era.

The pay-TV model is anchored on innovation in terms of creating and delivering superior television content that consumers are willing to pay for. This essential attribute places pay-TV providers in a unique position to spearhead development of quality content as consumers shift from the analogue to the digital television platform.   

Ironically, doomsayers have time and again predicted the decline of Pay-TV partly citing the ubiquitous presence of the Internet in today’s media landscape. But the numbers paint a totally different picture. The value of global pay-TV revenues reached $184 billion in 2012 compared to $135 billion in 2007. Total revenues of the pay-TV industry are expected to hit $225 billion by 2017 signifying good fortunes for this particular content delivery channel.

So what is driving this growth? Much of the success of pay-TV can be attributed to focus on delivering quality to viewers. We can call them the 4Qs of success, namely: quality content, quality sound, quality picture and quality service. As incomes grow in many countries including developing nations, demand for consumer goods and services has been on the upswing. An increasing number of households can now afford what were previously considered luxuries including subscription television.  

It is however important to note that quality is an outcome of innovation. Innovation is a process that requires time and continuous investment in creating, producing and delivering high-quality content to consumers. Besides quality, the pay-TV model has worked well globally in providing consumers with a wide choice of programming thus creating room for the development of a diverse bouquet of informative and entertaining channels. 

If quality is the lifeblood of pay-TV, innovation is what has enabled serious pay-TV providers to stay relevant in a very competitive environment. In a tough market, paid television firms are now offering more attractively priced consumer-focused packages to woo and retain subscribers. This is true even in Kenya as various players compete for a bigger slice of the growing market.

But given the huge capital outlay that goes into production of high quality television content, it is only fair that pay-TV providers are given the chance to recoup their investment. Ensuring a level playing ground is critical to securing value for customers while promoting innovation and investment in production of quality TV programs.    

Previously, there have been suggestions that paid-TV providers in the local market should be compelled to offer some of their content on other platforms. Proponents of this view argue that opening up content to other players in the market ensures fair competition. They cite a decision in March 2010 by the Office of Communications (Ofcom), the UK industry regulator, in support of this argument.

The case Ofcom was handling involved Sky Television following complaints by other players that Sky was exploiting its marketing position to play unfairly by restricting access to some of its premium content to other players. Ofcom ruled that Sky television was under obligation to offer its core premium sports channels, namely Sky Sports 1 and 2, at a wholesale level to retailers on other broadcasting platforms.

This ruling was later overturned by the Competition Appeal Tribunal on the basis that Ofcom’s findings were unfounded from a factual perspective. Sky had indeed constructively engaged other market players on the issue of premium content.

Interestingly, Ofcom had in its controversial ruling conceded that “Pay-TV sector delivered substantial benefits to consumers, both through investment in high-quality content and through innovative services”.

In a nutshell, the important role that pay-TV plays in creating and distributing quality television content cannot be gainsaid. As the world shifts to the digital television era, content will no doubt be king. The benefits in terms of capturing and retaining a larger audience will only accrue to players that are willing to put in the hard work of developing superior content for increasingly discerning consumers.