Survey Shows Subscription VOD and Targeted Advertising Is Key To Higher TV Operator Revenues

Posted On: 7th September 2014

Zenterio and Digital TV Europe (DTVE) released new survey findings in a white paper entitled “Interactive TV Monetisation:  The Big Picture.”  The survey explores how TV operators can increase average revenue per user (ARPU) from digital interactive services and reveals which of these services have the greatest revenue potential.

Robin Rutili, CEO, Zenterio said traditional pay TV growth is a thing of the past.  Consumers are now demanding more flexible ways of consuming video while spending less on subscriptions for existing services

“This survey demonstrates that TV operators are, in general, optimistic about the amount of revenue that interactive services can generate.  We echo this optimism as we strive to implement technologies that match and fulfill these evolving industry needs,” added Rutili.

The survey was conducted by DTVE amongst more than 100 interactive video industry operators, service providers, broadcasters and other industry executives from 42 countries and revealed the following perceptions about generating ARPU for TV operators:

  • Video-related interactive services are the services most likely to deliver ARPU to pay TV service providers.  These services are prioritized as follows:  subscription video-on-demand(23.6%), internet TV/OTT (20.8%), targeted advertising (13.9%) and transactional video-on-demand (11.1%).
  • Subscription video-on-demand is the favored interactive service over the next five years.  In terms of generating over 30% of ARPU in the next five years, 18.6% of respondents felt that subscription video-on-demand had the greatest potential, followed by transactional video-on-demand (15.3%) and e-commerce (14.1%).  The interactive services viewed as having the least revenue potential were voting and video telephony.
  • Popular TV shows and movies are on-demand priorities.  Popular current TV services and shows (68%), followed by popular recent-release movies (60%), are the most important criteria for potential higher revenues of on-demand services.  Early-release content would benefit revenues while online piracy and the widespread availability of free services are not viewed as significant hurdles.
  • The more personalized the advertisement, the better the revenues.  Amongst seven types of targeting or interactive features of advertising, targeting based on data and consumption patterns (46.5%) and targeting according to demographic group (26.4%) were rated the highest in terms of likely revenue-earning potential.  Many respondents believe that targeted services could result in over €10 per month in additional revenue.
  • Games, music and other interactive services such as cloud storage and app stores hold higher potential if bundled with other offerings.  Respondents rated freemium casual gaming and high-end subscription based Massively Multiplayer Online Games as the gaming business models having higher revenue potential than subscription based casual gaming.  Music streaming services are strong potential sources of revenue, but only in cooperation with established brands.

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