OTT fails to dent traditional pay-TV

Editor ©RapidTVNews | 30-05-2012

Despite the mountain of hype regarding the amount of cord-cutting or shaving taking place, hard facts are showing that over the top (OTT) pay-TV services are failing to rival traditional services.
According to research from Ovum, despite the fact that OTT TV services now more closely resemble those of their network-based competitors, they have a long way to go before they can match the quality and breadth of content of traditional pay-TV offerings.

Indeed the data showed that despite half of consumers with connected devices, such as PCs, tablets, game consoles, smartphones and smart TVs, using OTT services to catch up on TV or watch movies, more than half of these users are still subscribing to pay-TV services.
“While we expect OTT to become increasingly integral to the home video entertainment mix, there’s little evidence yet of consumers dropping their pay-TV subscriptions in favour of purely operator-independent solutions,” says Jonathan Doran, principal analyst at Ovum. “For the time being, OTT will remain a complement rather than an alternative to pay-TV.”
However, Ovum warns that the traditional players should not rest easy: it notes that in addition to enjoying what it regards as significant brand equity, a handful of key OTT players, such as LOVEFiLM and YouTube, can also leverage the financial strength and assets of their parent companies (Amazon and Google, respectively) to substantially improve their positioning.
With that in mind the analyst advocates partnerships between incumbents and would be upstarts. “For their mutual benefit we believe it is paramount for operators and OTT players to collaborate, yet we have seen little evidence of this to date, with the notable exceptions of Xbox Live and Samsung,” Doran added. “As competition in the TV services market hots up, there is a crucial need for clarity and guidance for all those involved. While traditional service providers must understand how new entrants are threatening their established revenue streams, OTT players also need greater direction to leverage partnerships that will enable them to deliver quality experiences, attract loyal consumers, and ultimately make money from TV services.”