OTT on the Rise

By Ron Hendrickson - The analysts have spoken ... and more or less told us what we already know. Traditional pay TV is declining, and ...

Speed freaks, rejoice: DOCSIS 3.1 just came another step closer to reality.
Speed freaks, rejoice: DOCSIS 3.1 just came another step closer to reality.
The analysts have spoken ... and more or less told us what we already know. Traditional pay TV is declining, and over-the-top (OTT) is on the rise.

According to several research houses, the North American pay TV industry - cable, satellite and telco - continued to shed video subscribers through 2015, albeit at a somewhat slower pace than in recent years. For example, although the numbers reported by SNL Kagan and the Leichtman Research Group differ, the trend line is consistently downward.

To a certain extent, this is to be expected. In a post-peak market, down is about the only direction you can go. According to Digital TV Research, that peak was reached four years ago, and the research house expects North American pay TV penetration to drop from a peak of 87% in 2012 to only 80% by 2021.

The ready and cheap availability of online video - from over-the-top (OTT) subscription services such as Netflix (NASDAQ:NFLX) to YouTube to content owners going direct to the consumer a la CBS - is accelerating the traditional pay TV decline, though to what degree is a matter of some debate. Digital TV Research deems cord cutting - dropping pay TV altogether - a significant threat, while Nielsen and SNL Kagan regard cord shaving - dropping big expensive pay TV packages in favor of cheaper ones - as the greater problem. Nielsen and Parks Associates both regard the second screen as a complement to the big TV in the living room rather than competition for it. Who's right remains to be seen.

More certain is that OTT is definitely expanding, both in terms of providers offering it and in gear to access it. Sony's PlayStation Vue OTT service recently went nationwide. Strategy Analytics says demand for dedicated streaming media boxes and dongles grew 32% last year, and the NPD Group reports that 52% of U.S. broadband households now have TVs connected to the Internet in one way or another.

No matter how you shake it, the Magic 8 Ball keeps coming up OTT.

More in Multiscreen
Content Dam Btr Sponsors A H Arris 199x70