Operators target “Super Aggregator” role: But is the demand there?

A crowd of people gathers into the shame of a superhero

The UK’s BT recently revealed plans to become a “super aggregator” of content services, adding Amazon Prime Video to its platform alongside Netflix and Sky’s Now TV. It may help to offset OTT competition, but will consumers pay a premium for the convenience of “one-stop” content shopping?

Price point, pain point
Most Pay TV operators have launched OTT offerings to limit cord cutting, but price point remains a big problem. Netflix, Amazon and regional brands like Stan in Australia or Germany’s Maxdome have built huge content libraries with significantly lower fees than typical Pay TV subscriptions.

One response is so-called “skinny bundles”: fewer channels for a lower price. It may reduce churn, but at what impact on ARPU? Or long-term brand value? And will it attract “cord-nevers” who weren’t customers in the first place?

As Joel Espelien of TDG Research so beautifully puts it, offering skinny bundles right now is like making a smaller hamburger when everyone is turning vegetarian.

Keep friends close, and enemies closer
BT’s strategy of turning OTT rivals into partners could reduce hostile competition, while maintaining its grip on the lucrative broadband link to the home. Subscribers watch Netflix or Amazon Prime, but BT remains at the heart of the experience.

Of course, lots of global operators have partnered with Netflix. Sky even plans to bundle Netflix into a combined subscription for its Sky Q platform. Others have opened the door to OTT competitors by selecting Android TV devices that include rival apps by default in Google’s Appstore.

But it’s BT’s partnership with Amazon that’s most noteworthy, coming as Amazon signals readiness to integrate Prime Video with other Pay TV platforms. Until now, Prime Video was mostly limited to Android TV and Amazon’s own Fire TV devices. Operators viewed Amazon’s live channel and sports rights ambitions as a greater threat than Netflix.

It ain’t what you do, it’s the way that you do it
BT obviously thinks it’s a risk worth taking, but demand for “super aggregator” services will need to be high to maintain premium ARPU subscriptions. Sure, consumers want the convenience of all their favorite content in one subscription: our Consumer Insights team see hundreds of pirate sites trading on this appeal every day. But, unlike the pirates, pay TV operators have licensing costs to cover, and unless their aggregated content user experience is truly amazing, I’m not sure that simply being a one-stop-shop will command a premium price.

Successful aggregation requires much more than just sticking another app on your home screen. It needs to offer seamless switching between different sources of content, whilst still maintaining the authentication and security needs of each content partner. The ideal scenario includes aggregated content discovery – a single search that works across all OTT services. Now that really would be a convenience you can’t get from separate devices!

Bengt Jonsson | SVP Sales