Over-the-top (OTT) TV providers like Netflix, SlingTV, and Amazon Instant Video should be encouraged now by two key trends: cord-cutting consumers are driving explosive growth in OTT subscriptions; and OTT ad revenue will skyrocket over the next five years.
On the face of it, these trends portend a gloomy future for broadcasters and cable providers scrambling to cope with fierce OTT competition. But despite declining subscribers, cable companies will make money shifting away from video services and toward faster broadband connections that can carry OTT video. Broadcasters have a play in the OTT space as well, FCC Chairman Tom Wheeler told attendees of the recent NAB show. As cord-cutting continues to erode cable operators subscriber base, Wheeler urged broadcasters to cash in on OTT video delivery as a way to gain a competitive edge.[subscribe_reminder]
New data from Juniper Research has shown that subscriptions from OTT TV providers will generate $31.6 billion by 2019, up from just under $8 billion in 2014. Continued growth in the established markets of West Europe and North America – as well as the emergence of key OTT players in the Far East and Asia Pacific -- will bring a surge in the uptake of OTT subscriptions over the next four years. The report also forecasts that 84 percent of OTT subscriptions will be made via connected TVs by 2019; IPTV revenues are set to more than double between 2014 and 2019 – Juniper analysts noted that this strategy would pay off for network operators, who have made significant investments in the infrastructure to support triple and quad-play services.
The practice of cord cutting is particularly evident with Millennials, who are fleeing pay-TV subscriptions and accessing video content over the Internet. Still, cable operators have an edge when it comes to providing broadband services of 50 megabits per second or more -- speed is essential in delivering an engaging consumer experience. OTT and the future of video content were hot topics at the NAB 2015 show, as broadcasters showed signs of embracing the next-generation technology. Broadcasters are increasingly eager to launch direct-to-consumer video services and most broadcasters will take action to launch OTT services of some sort by the end of this year.