The pay-TV market has been struggling with increasing customer churn and maintaining ARPU, and is forecast for only 3.7% CAGR through 2020, according to ABI Research.
In contrast, OTT video continues its strong growth, and should see around 26% total revenue growth in 2015, with 24% CAGR through 2019.
With the growing popularity of independent OTT services, such as Netflix and HBO Go, customers are starting to demand a similar experience from their pay-TV subscriptions, including features such as content search and recommendation and mobile device support.
“Comparatively high priced pay TV bundles are losing customers to more inexpensive, IP-delivered content,” says Eric Abbruzzese, Research Analyst. “Operators that are first to market with new set-top box technologies can expect strong returns—as much as 10% higher ARPU than with legacy technology—while those introducing the technology later will struggle to see similar success.”
Properly supporting multiscreen features has become nearly compulsory with the ever-increasing focus on mobile device usage, and is more easily done as these more advanced IP-enabled STBs are released.