Pay TV Meets OTT: 1 in 5 Get Streaming Service Through Pay TV
It's the embodiment of "If you can't beat 'em, join 'em": Researcher Parks Associates released data today showing that 21 percent of pay TV subscribers in the U.S. also subscribe to a streaming service through their pay TV provider. If that doesn't sound like many, consider that only 10 percent did so one year ago. This shows cable and satellite companies see the inevitability of over-the-top services, and have decided it makes more sense to add streaming services to their platforms rather than fighting them. Consumers appreciate unified billing, so this move is a win for subscribers, as well, who can pay one monthly bill for multiple services.
Not that all the news is good for pay TV, however: Parks revealed that 77 percent of U.S. households now have a pay TV subscription, down from 86 percent in 2015. There's a feeling in the industry that this number is close to reaching its bottom, so perhaps a plateau is coming.
While some households get their OTT services from a pay TV provider, the reverse is also true: Parks says almost 18 percent of homes with a cable channels get them through an online video service, such as Sling TV, DirecTV Now, or Hulu With Live TV.
“We are seeing today a transition within the pay TV marketplace," says Brett Sappington, senior director for Parks Associates. "Pay TV offerings are moving online, including bundles of channels and direct-to-consumer offerings from traditional cable TV brands such as HBO, Starz, and Showtime.”
This data comes from the Parks study 360 View: Access and Entertainment in U.S. Broadband Households.
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.
According to Convergence Research, OTT is growing at a faster rate than pay TV, but its lower average cost make it far less profitable.
Younger viewers especially get much of their live video from online sources. Pay TV customers need to shift their offerings to stay relevant.
The OTT market is booming, as 69% of broadband households now have a subscription, and many subscribe to 3 or more services.
Sling TV makes a big jump in the top 10, but skinny bundles in the works from DirecTV and Hulu are certain to shake things up.