Is There a Price War Looming for Over-the-Top Content? Part 2

As we explored in Part 1, from a general perspective, the price of cable services is outpacing inflation[j1]. As a result, customers are looking for more affordable solutions to meet their entertainment needs. And many of them are turning toward over-the-top (OTT) content, such as from Netflix, Amazon Prime and Hulu Plus. In doing so, they simply need an Internet connection to enjoy the programming offered.

With announcements seemingly popping up every few days, it appears as though the OTT market is about to get a lot of new brand-name entrants including HBO and Showtime, as well as offerings from companies you might not expect, like Verizon.

According to recent research, there are about 10 million U.S. households that pay for broadband Internet connections but don’t pay for cable packages. These customers are the ones most likely to be targeted by the new entrants into the OTT market, which is expected to grow 21 percent this year, reaching $10.7 billion.

As these industry juggernauts move forward with their OTT offerings, just how much will subscriptions to these services cost? After all, one of the main reasons some customers have fled cable is because of the hefty sums charged for those services. As the major OTT players compete against each other for the 10 million customers not paying for cable, consumer costs are likely to come down, making entertainment more affordable.

In today’s digitally driven world, it doesn’t make much sense that customers should have to pay for TV channels that they don’t use. So, this step into the OTT field is setting the wheels in motion for eventual a la carte content subscription offerings.