Pay-TV reduction not cord-cutting the result of OTT growth

Bapun Raz

Staff member
3 Nov 2010
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A leading analyst is arguing that a premature focus on cord-cutting is missing the real opportunity from an expected surge in over-the-top (OTT) capability which will instead be premium pay-TV replacement.
According to research by The Diffusion Group (TDG), the number of global households using OTT video services will grow from 106 million in 2010 to 250 million in 2016.

The TDG report, OTT TV Platforms 2011, shows that there will be a number of key drivers that will spur OTT TV platform diffusion, namely replacement of legacy devices with net-ready models; wider access to digital content across a variety of connected TV devices; policies affecting the distribution of Internet video content impacting positively the adoption of devices that enable OTT delivery; consumers growing accustomed to on-demand media delivery; consumers increasingly wanting to access digital media on their TVs; OTT services are now being offered on multiple screens, allowing a consumer to enjoy media not only on their PCs, but on mobile phones and tablets as well as TVs.

Commented TDG Senior Partner Colin Dixon: “In 2009, net-based TV video services were few and far between. Today, when a consumer connects a 'smart' TV, a Blu-ray player, or any other video platform to the Internet, they will find a wealth of TV-optimized content and applications at their disposal."

Yet even though TDG says that this will means that OTT will have reached a tipping point whereby 51% (488 million) of households will have the capability to receive OTT TV services, TDG say that only a portion of these will actively take advantage. Furthermore, according to Dixon, this will take the form of replacing not necessarily a cable TV service per se, as many predict in the normal nightmare scenario, but instead premium channels such as HBO being dropped for OTT offerings such as Netflix and Hulu.
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