Pay-TV operators will come dominate the online subscription TV market in the coming years, rather than the now-popular dedicated online services like Netflix, new research predicts.
Strategy Analytics says that the growth of online subscription TV would “herald the end of the first phase of online viewing which saw the rise of on-demand specialists such as Netflix and ad-supported platforms such as YouTube.”
In its 2013 Global OTT Forecast, Strategy Analytics said that, while online subscription TV was only just beginning to make an impact, it would be the principal driver of OTT spending growth in the next five years. Global spending is set to reach $4.7 billion in 2018, with most spend concentrated on Western Europe and North America.
Strategy Analytics director of digital media strategies Ed Barton said we were “entering a new phase in the evolution of TV distribution over the public internet”.
“Pay TV service providers are recognising the defensive imperative in ensuring they have a major say in the development of online TV. Standalone online subscription TV addresses the holdouts who will not be swayed by traditional premium TV offerings by promising high quality content including, crucially, live sport, shorter commitment periods, a lower cost of entry and much simpler installation and hardware requirements than traditional, ‘full fat’ pay TV services.”
The research analyst’s 2013 OTT forecast spending to 2018 across 30 territories.
It said services like Sky’s Now TV service in the UK would exemplify the growth areas – with the most successful online TV subscription services coming from pay-TV providers leveraging existing rights and relationships.
Strategy Analytics also predicted that OTT startups like Aereo – legal challenges notwithstanding – and Swedish cloud platform Magine would be “prime targets for service providers who are late to the online TV party”.
Barton continued: “There are numerous issues the TV ecosystem needs to work through in the dash to deploy. Content rights and windowing will be impacted on a territory-by-territory basis while deployments will need to be designed in order to minimise cannibalisation of the core pay TV business.
“We expect to see bundling of online TV subscriptions with network access deals and device sales in the drive to build customer numbers. Once these services are established in the marketplace spending will accelerate and that is when we will see the extent to which online subscription TV can truly impact the huge spending volumes pay TV delivers today.”