The pay-TV industry went through a bloodbath on Wall Street last week following a second-quarter earnings season filled with the familiar refrain of lost video subscribers. But executives for top cable, satellite and IPTV operators are still insisting that their industry will continue to dominate the TV landscape for up to a decade, and that any transition to an OTT environment will be a gradual one.
Despite the emergence of next-generation video services, the pay-TV market is still going strong. ABI Research said in a recent report that worldwide, pay TV has penetrated almost half of all homes, and should reach 1 billion homes by 2017.
NEW YORK--The media and entertainment industry is struggling with new ways to package their content for a younger, OTT-friendly audience. But most are getting in their own way by adhering to traditional TV business models. It especially dampens the effect that current technology could have on IP-based, over-the-top video.
Add one more study to the litany of cord-cutting woes faced by pay-TV providers. According to a new Digitalsmiths study, 32.4 percent of current cable, satellite and IPTV subscribers say they're "on the fence" about keeping their service and would need enticement to stay. And consumers are increasingly aware of the expanded OTT options available to them, such as Sling TV, making for interesting times in the cable biz.
Can we panic now? The depressingly slow growth in new subscribers to pay TV--less than 10,000 for the first quarter of 2015, a record low--should signal to traditional cable operators that a sea change in the way viewers consume video is well under way. But some appeared to cling to the notion that some growth means things are still going well in the linear TV space.
If Liberty Global's Mike Fries were to do the "Thank You" note-writing schtick that Jimmy Fallon does weekly on The Tonight Show, his first riff would begin, "Thank you, Netflix, for showing me how to compete with you." That's essentially what the cable giant's president and CEO said during a panel at ANGA Com this week.
Netflix has incurred a huge influence in the decline of linear pay-TV. But acceleration of that impact will probably slow down, as the SVOD service is forced to infiltrate homes with less affluent and older consumers.
Despite all the talk about how online video is changing the viewing landscape, it's still early days for over-the-top technologies, and new business models are still emerging. Forward-thinking pay-TV operators are trying to see OTT as an opportunity, not a threat--and are testing the waters accordingly.
As it was for the music industry before them, pay-TV providers may find that revamping their business models to ensure future revenue growth is problematic. What are operators learning as they dip their toes into the OTT waters?
Smoothing down fears that 7 million consumers might cancel their pay-TV subscriptions this year once HBO launches its over-the-top subscription service, Parks Associates added a bit of context to its initial report. The gist? Don't panic…yet.