The debate continues over whether large numbers of Americans will “cut the cord” and replace cable/satellite pay TV with over-the-top (OTT) alternatives delivered via broadband Internet. MagnaGlobal forecaster Brian Wieser checks in with his take.
“Rising from virtually nothing today, we expect OTT subscribers to number 8.5 million by 2016 and 27.3 million by 2020. These figures represent 6.9% and 21.3% of households, respectively,” Weiser wrote in a quarterly update.
As OTT grows, Weiser sees the broadband services most impacting satellite TV competitors, since they lack the broadband platforms of the telcos and cable MSOs.
The analyst believes that “OTT will contribute to a continuous expansion of the market for multichannel video services, as new video packages (the combination of programming, features and pricing) could vary meaningfully from today’s offerings, and thus may attract new segments of subscribers.” By the very nature of OTT, Wieser assumes that every subscriber will have DVR capability. That’s also likely to result in more VOD interest.
“These factors result in our year-end 2016 forecast for DVR subscriber households at 60.7 million (49% of TV households), up from 36.7 million (31% of TV households) as of the end of the second quarter of 2010. By 2016, we expect that Video On Demand – which we now redefine to include OTT services – will reach 70.3 million households (approximately 57% of television households). This compares with 50.1 million VOD households (43% of total TV households) at the end of the second quarter of 2010,” Wieser said in his forecast update.