Strategy Analytics: OTT VOD uptake sparks serious cord-cutting fears

Editor | 07-11-2013

After years of cord-cutting being dismissed as hype, research from Strategy Analytics is suggesting that the popularity of subscription over-the-top (SVOD) services may herald a mainstream exodus from pay-TV.

The 'OTT Subscription based Video-on-Demand becomes a Threat to TV Service Providers' report notes that fundamentally access to OTT SVOD services is becoming more easily available due to the integration of smart TVs as the main TV in many consumers' homes. It regards the increasingly popular services as offering a cheaper media source with a competitive breadth of video content, and as subscriptions are increasing these services are becoming a major threat to TV providers.

In particular, Strategy Analytics observes that while OTT SVOD services provide exclusive content, such as House of Cards and Arrested Development on Netflix, consumers have become drawn to on-demand video in a similar way to regularly broadcast TV – that is to say, tuning in to watch specific TV shows and videos.

When coupled with the additional benefits of being less expensive and more readily available – that is, it provides a more appealing, familiar and easy-to-use user interface and an easier method to discover video content of interest – the analyst warns pay-TV providers that OTT SVOD services are now becoming a threat. Worse, the survey suggests that many consumers are looking to become cord-cutters for good.

"When participants were asked where they are sourcing video content from, the majority did not even hesitate to mention an OTT SVOD as their main source," commented Taryn Tulay, report author and senior analyst in the Strategy Analytics' Digital Home Observatory (DHO). "Consumers find that the variety and quality of OTT SVOD content is meeting their media needs, without any restrictions of what device they are able to view the video content on and at a cheaper price."

"Initially, OTT SVOD content was used as a last resort when nothing else is on, or for catch-up TV," added Kevin Nolan, VP of Strategy Analytics' User Experience Innovation Practice (UXIP). "However, the benefits of OTT SVOD are outweighing those of broadcasted TV, with many consumers finding broadcasted TV less valuable to them. It is imperative for TV providers to start looking at how they can incorporate such services that are 'top-of-mind' for the majority of consumers."