ABI Research: cord-cutting is a $17BN threat to pay-TV operators

Joseph O'Halloran | 23-10-2012

TV operators are putting a $16.8 billion revenue stream at risk as a fifth of consumers consider online as a pay-TV replacement, according to a new ABI Research study.
Specifically, ABI Research’s Technology Barometer Research Service found that with the US pay-TV household penetration set to decline approximately 0.5% per year through 2017, a slow migration will continue even with an economic recovery as consumers have additional entertainment choices like improved online and over-the-top (OTT) video experiences.

In order to mitigate such risk, ABI advises operators to build a business that leverages OTT components. However, it adds that doing so requires an understanding of the current and future customer target and cites Dish Network’s failure to license adequate content when it acquired Blockbuster as the key to it falling short against Netflix.
“While many OTT services focus on movies, the goal of lightweight pay-TV packages [such as Sky’s NOW TV] should be to introduce customers to the brand and tease customers with premium content offerings,” commented Sam Rosen practice director, TV and video.
The study also noted that 30% of online consumers that have pay-TV have the foundation in place for OTT services but do not see the value proposition for online video. This group, said ABI, is “ripe for building and positioning services.”