PAY GO TV ,also said PAY AS GO TV,Competition between free-to-air and pay-TV services, which has intensified considerably during the past few years, is driving the need for a mass-market strategy.
Over-the-top (OTT) services and innovative 'TV everywhere' offerings are hot topics in the pay-TV sector, even though the monetisation potential for such services continues to be unclear. By contrast, prepaid 'pay-as-you-go' (PAYG) services could have more significant monetisation potential. The prepaid PAYG model is already very prevalent in the mobile world, and is often cited as a key driver of the tremendous growth in mobile subscriber bases – particularly in emerging countries. In the pay-TV sector, pay-per-view (PPV) premium content has been around for years – almost as long as pay TV itself in the USA. However, beyond premium content, pay-TV operators have not launched significant PAYG services. Pay-TV services have predominantly employed a subscription model, largely because they were initially positioned as a luxury for high-income segments. This approach also has the benefit of simple billing requirements, because service providers tend to offer only ten packages at the most. However, as new entrants enter the market and technology infrastructure improves, there is a growing recognition that price skimming or 'creaming' the market is not a sustainable strategy. Instead, a mass-market strategy is likely to be more effective in the long term, particularly as a means of building upon the economies of scale for content. Competition between free-to-air (FTA) and pay-TV services, which has intensified considerably during the past few years, is also driving the need for a mass-market strategy. Pay-TV operators need to reach a wider customer base than ever before or risk FTA entering and winning a substantial share of the market. The economies of scale achieved for the manufacture of set-top boxes (STBs) and satellite dishes have also made it possible to service low-end segments more profitably, with a shorter payback period. These market trends have enabled a new business model: a hybrid of pay TV and FTA TV, whereby customers buy equipment to watch basic channels and pay for additional content on a PAYG basis, either in the form of an entry-level subscription or add-on packs. This approach allows consumers to gain a wider choice of TV channels without committing to a monthly subscription. In a recent survey of international case studies, Analysys Mason identified a range of potential target segments for PAYG pay-TV services (see Figure 1).
Figure 1: Target segments for PAYG pay-TV offerings:
When launching a PAYG proposition, pay-TV providers need to consider the possibility of some cannibalisation, while ensuring that the offering is attractive enough to win new subscribers and competitive against new entrants or FTA. The content choices offered should not be more flexible than those for subscription packages because this would increase the possibility of cannibalisation. The PAYG content may also drive take-up of the STBs themselves, which could create upsell opportunities in the long term.
When you have a limited number of TV choices, you spend more time watching the shows that you can lose yourself in — and less time channel-surfing