Cord-cutting still not common, but OTT soars

DetailsMichelle Clancy | 12 June 2015

Even with new entrants like Sling TV and HBO Now, cord-cutting is still an uncommon phenomenon in the US: Only 7% of its 115 million households have broadband and OTT but no pay-TV.

According to Parks Associates, 57% of U.S. broadband households subscribe to an OTT video service, meaning that an awful lot of them have cable too. Those 8.4 million non-pay-TV households represent consumers who have discontinued pay-TV service, and those who have never subscribed to pay-TV.

amazonAmong European broadband households, 57% take OTT in the UK, 29% in Spain and 24% in Germany. But 4% or less are OTT-only, among all households. That being said, OTT video service subscription revenues will increase from nearly $9 billion in 2014 to over $19 billion in 2019, the firm found, as the market heats up.

"The OTT video services marketplace continues its rapid rate of change, impacting the video ecosystem across world markets," said Brett Sappington, director of research at Parks Associates.

The firm said that avid video consumers are still taking pay-TV services if they can afford them. However, companies in the video ecosystem are eager to reach those consumers who are currently falling through the pay-TV cracks. So, one of the growth drivers is the fact that operators are introducing their own OTT services to appeal to consumers who are not currently taking pay-TV.

"While operator attempts at TV everywhere have made little impact, OTT video services are experiencing a boom," Sappington said. "A variety of new players are entering the market, and operators including DISH Networks, Rogers Communication, Bell Canada and Sky are responding with OTT video services of their own. How the industry responds to this change will ultimately affect the fundamental structure of the video industry for years to come."