Is OTT Good News for Pay-TV Operators?

Over-the-top content: Is it the worst enemy of pay TV operators, or could it be good news, presenting new opportunities to drive both content and revenue? Opinions are mixed on the subject of OTT vs. pay TV, but many are starting to believe that OTT could actually be good for pay TV operators. Let’s take a look at three benefits pay TV operators could reap from the rise of OTT.

A chance to offer premium content: Consumers go with the service that offers the most unique, high quality content that suits their individual tastes, and that fact is not expected to change. Plus, even with the proliferation of mobile devices, many consumers still prefer to watch content on their televisions.

While OTT big players like Amazon and Netflix are developing their own, proprietary content and using it to bring in more subscribers, pay TV operators still have an advantage in this area when it comes to sporting events and other premium content that isn’t available on OTT.

Pay TV operators could generate more revenue due to OTT: While OTT revenue is growing at a steep rate, it is only expected to reach 10 percent of pay TV revenue by the end of 2019. Providing multiscreen services can actually help pay TV operators reduce subscriber churn and keep revenues high, as consumers demand the ability to watch what they want, when they want, on any screen. By offering additional multiscreen services to satisfy subscriber demands for OTT, pay TV operators will stay strong in the marketplace.

Increased OTT use also can support “triple play” efforts for pay TV operators. In an article in Variety magazine, industry experts speculated that OTT could provide broadband providers a method for upselling customers to faster and more expensive service tiers of Internet service as a way to profit from rising OTT viewership. Plus, cable companies may be able to negotiate better licensing fees and terms for content, or even collaborate with OTT providers to offer more content on more screens.

Operators can use OTT to better reach their subscriber base. Pay TV operators can preserve their subscriber base and keep revenue flowing by customizing the television experience for subscribers so they remain loyal to the service.

Analysts agree that if pay TV operators can find ways to maximize the OTT trend and even cooperate with OTT providers to deliver more premium content on more devices to more viewers, they will be more likely to hang on to their subscriber base.

OTT is on the rise, with more than half of consumers who own a connected TV increasing their use of OTT broadband TV services such as Netflix, YouTube, and Hulu, the TDG Group reports. This, coupled with a decline in pay TV subscribers, may appear to spell bad news for pay TV operators as subscribers threaten to cut the cord. However, it’s important to remember that well over 80% of U.S. households still have cable, and still use it to enjoy programming and entertainment they can’t get from an Internet service.