Analysis & Opinion

Ovum applauds new dawn for Netflix and pay-TV

TV Connect, London

TV Connect, London

Rather than a threat, internet TV giant Netflix increasingly represents a potential complement to traditional pay-TV services, according to leading analyst firm Ovum’s new Telecoms, Media and Entertainment Outlook 2015 report.

Ovum’s Telco–OTT Partnerships Tracker records collaborations between telcos and over-the-top (OTT) players, and recently identified a string of agreements between some of the smaller US cable operators (Atlantic Broadband, Grande Communications, and RCN) and Netflix. As of September 2014 the VoD streaming service had agreed 11 such partnerships within a 12-month period.

Extrapolating from this tendency, Ovum suggests that the days when OTT video services were viewed as any sort of enemy are steadily disappearing in the wing mirror.

“A significant proportion of traditional pay-TV subscribers are already engaging with OTT subscription VoD (SVoD), and with frequent users of such services more likely to downgrade or churn from their pay-TV subscriptions, operators must somehow react to this challenge,” reads the report. “Rather than risk alienating their customer bases by obstructing access to OTT services, Ovum believes operators should capitalize on this growing trend by offering a superior user experience to that available from unmanaged services delivered over the public Internet. They are also likely to benefit from their association with the Netflix brand.”

The question of user experience is one that will receive intriguing examination at this year’s TV Connect in London, with a fireside chat, ‘Creating the Netflix User Interface,’ between Netflix’ Xavier Amatrain, and Comcast’s Brian Curtis.

Meanwhile Ovum says that around half of those regularly accessing these services (once a month or more) have either downgraded or cancelled their pay-TV subscriptions or are considering doing so; fewer than a third of consumers who rarely use OTT SVoD have either downgraded or cancelled their pay-TV subscriptions.

Indeed, data from Ovum’s 2014 Consumer Insights survey shows that pay-TV customers are at least twice as likely as free-to- air-only viewers to also be using online SVoD services such as Netflix.

Netflix now has a total of 14 partnerships that enable the distribution of its service via pay-TV STBs.

Download the full report here.

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