OTT to be considered a 'friend' to pay-TV


Joseph O'Halloran

| 12 August 2015

Flying in the face of the recent Wall Street carnage for pay-TV providers, over-the-top (OTT) services should be seen as a complement to, not a replacement for, traditional pay-TV according to Horowitz Research.

The analyst's latest research from Multiplatform Content & Services report shows that even though two-fifths of Internet users have multichannel and an OTT subscription video-on-demand (SVOD) service, 42% have multichannel only, 11% have an OTT SVOD service only, and 7% have neither. Among OTT SVOD users, 78% are also multichannel subscribers.

Among Internet users overall, the survey found that just over half have access to an OTT SVOD service such as Netflix, Hulu paid or Amazon Prime Instant Video rising to three-quarters among millennials. This latter and increasingly key group were three times as likely to have an OTT SVOD service and no multichannel (21% among Millennials vs. just 7% among those over 35) and nearly half (48%) report spending more than 50% of their viewing time streaming.

Yet despite finding that OTT currently was not the asteroid headed for earth as some suggest, the analyst warned that recent OTT developments from traditional pay-TV distributors DISH's Sling TV and DirecTV's Yaveo could start changing the game. "For many, streaming video has become an integral part of the viewing lifestyle. The idea of an Internet TV service, at a price point and with more customisable options, is an attractive prospect," said Adriana Waterston, Horowitz's SVP of insights and strategy.

Indeed the survey also discovered that 55% of Millennials who are multichannel subscribers say that if the price were right, they would subscribe to an Internet TV service instead of their current cable or satellite service, compared to 43% of 35+.

"For millennials, streaming is as natural as turning on the TV set, so an OTT service direct from a distributor could be a natural fit," added Waterston. "No longer tied to their physical infrastructure, OTT offerings have the potential to offer huge opportunity for distributors to reach beyond their footprint, shaking up the entire pay-TV model".