In U.S., OTT Revenue Grew 41%, While Pay TV Grew 1% in 2017
In the U.S., over-the-top (OTT) video service revenues are exploding. Pay TV, not so much.
According to reports created by Canadian firm Convergence Research, OTT revenue in the United States grew by 41 percent in 2017, rising to $11.9 billion. That's based on data from 55 services, including Netflix. That total should grow to $16.6 billion in 2018.
Revenues from U.S. pay TV services, on the other hand—including cable, satellite, and telco—grew by 1 percent in 2017 to $107.6 billion, with average revenue per user at $94.30 per month. That total should drop slightly to $107.4 billion in 2018, then drop again to $106.9 billion in 2020. If true, pay TV's recent losses are starting to level off.
Even though pay TV is losing subscribers while OTT is gaining, pay TV's higher fees will keep it from feeling the pinch. The average revenue per user (ARPU) for pay TV was six times that of OTT in 2017. By 2020, pay TV's ARPU will be only four times that of OTT.
"The gloves are off," Convergence Research declares. "Amazon, Apple, DAZN, Facebook, Google and Netflix all have the money muscle to finance their own productions or outbid on programming including major sporting franchises. We expect especially for the U.S. market going forward fewer content deals between programmers and independent OTT providers: 2017 saw Disney choose not to renew with Netflix and embrace OTT, [and] HBO not renew with Amazon in the U.S."
While OTT competition has slowly eroded pay TV numbers in the U.S. for years, the global pay TV audience is growing, finds ABI Research.
In a crowded field, pay TV operators add over-the-top options to compete, while streaming companies try to stand out with excellent quality of service.
Parks Associates data shows that 21 percent of pay TV customers subscribe to a streaming service through their account.
Consumers no longer understand the point of having access to hundreds of channels they never watch, with all generations dissatisfied.
In an eye-opening survey, TiVo finds that viewers are more price-conscious than ever, and 82 percent would like an a la carte option.