Consumers want high-speed broadband to watch more video. And they watch more video -- regular pay-TV and over-the-top services -- as their neighborhood broadband speeds increase. But with more than 200 OTT services now available, US consumers are getting video overload.
This could create consolidation or, in some cases, closure for some OTT providers, according to Parks Associates recently released report, "OTT and Pay-TV: Competition and Partnership." It also may lead to more affiliations between once fierce competitors.
"2018 could be the year some OTT services begin to fold under the pressure," according to Parks Associates.
That's partly because the most dedicated OTT-only subscribers already are saturated: There's been only a slight increase in penetration of OTT-only households since 2015, the research firm reported. Most likely this growth is attributable to people moving into their own homes or the relatively few new to cord cutting.
While people can choose to watch content on any screen, that old standby, the television, reigns supreme. OTT viewers sit in front of the TV an average of 4.2 hours per week -- just like their parents and grandparents -- at least 50% more than other platforms, Parks Associates found. By comparison, on average Americans watched 4 hours and 3 minutes of live TV weekly, according to a Eurodata TV Worldwide survey.
OTT is mainstream in the US, with more than two thirds of US broadband households subscribing to at least one service and 38% broadband households paying for more than one, Parks Associates reported. Currently, 17% rely solely on OTT, the research firm said, whereas 52% have both forms of entertainment.
Since they must shoulder the cost and support of broadband without any of the benefits associated with OTT, operators want to partner with these providers. Spurred in part by Amazon Channels' success as a distribution channel and heeding comments by cord cutters, operators increasingly see OTTs like Netflix, Amazon and Hulu as friends, not foes. (See Pay-TV Subs (& Cablecos) Love OTT Partnerships.)
After all, about one third of cord cutters would have stayed true to "their service provider if offered a Netflix-style service bundled with broadcast TV channels," wrote Parks Associates.
Likewise, promotional options such as free or subsidized customer premise equipment could encourage cord cutters to remain with cablecos, the researcher said.
That could all change, however, as younger generations start paying for their own services. Generations reared on Internet videos will want high-speed connectivity, certainly. But who they'll pay and what they'll pay for is up for grabs, and nobody -- not mobile, not pay-TV, not OTT -- has them locked in.
— Alison Diana, Editor, Broadband World News. Follow us on Twitter or @alisoncdiana.