OTT opportunity as pay-TV providers reach addressable limits

DetailsEditor | 20 May 2015

Whether cords are beginning to be cut or shaved is a matter of debate; what isn't, says an Analysys Mason report, is that pay-TV operators have reached most of their addressable market.

Indeed the analyst's Connected Consumer Survey 2015: Pay-TV and OTT video services report based on research in the UK, USA, France, Germany, Poland, Spain and Turkey offers the blunt conclusion that there is now little room for growth in subscriber numbers for such providers with over-the-top (OTT) rivals becoming increasingly popular and viewing habits changing as video content is viewed on multiple devices.

At the heart of the analysis is the calculation of a net promoter score (NPS) metric used to calculate customer loyalty and satisfaction. In Poland, Spain, the UK and the USA, the operator that had the highest NPS for fixed broadband also had the highest score for pay-TV.

Generally OTT video was adopted alongside pay-TV services, and no access technology was dominant across the panel, but the most common TV technology in three of the seven countries was free-to-air (FTA), which was the main barrier to pay-TV adoption. On average, consumers watch OTT video on three device types and expect a seamless multiscreen service. Smart TVs were most likely to be used to view paid-for online content and customers now expect a multiscreen experience. Video streaming devices were most often found to be used by smart TV owners, a trend which suggests that smart TVs do not yet have all the desired features.

In the new world of TV where multi-device and OTT partnerships present the next growth opportunities, the report confirms the power of the Netflix brand which dominates the OTT video market in countries where it has been launched, and appears to have few strong competitors elsewhere.

Looking to calls to action, Analysys Mason advised pay-TV operators to offer access to OTT video on their set-top boxes to enhance customer experience and improve retention. Indeed it believes that integrating Netflix into set-top boxes could reduce pay-TV churn by making it easier to view OTT video services.