OTT Apps Cut Into Mobile Video Revs

Smartphone-video-AWhat do you get when you give consumers the ability to access the full HTML Internet, over-the-top (OTT) video services, apps and TV Everywhere from mobile devices?

A significantly reduced incentive for them to pay for dedicated carrier-based mobile video services, according to new research from SNL Kagan.

“With an eye on preventing an exodus to device-agnostic OTT services like Netflix and Hulu Plus, multichannel operators have rolled out TV Everywhere apps, but these have so far been met with a lukewarm consumer response,” said John Fletcher, an analyst at SNL Kagan, and author of the report.

For the time being, OTT apps like Hulu Plus and Netflix are resonating more with consumers than TV Everywhere apps from multichannel operators, according to Fletcher.

As the research found, free video iPad apps from major content owners, including Disney, Viacom and Time Warner, are doing well.

However, paid video apps are not. “This is shifting emphasis toward video app advertising to generate revenue,” Fletcher notes.

Still, overall, many content owners are starting to view mobile as a necessary “churn reduction tool” to complement existing multichannel subscription services, and less as an opportunity to generate new revenue.

Added Fletcher: “We think the shakeout is healthy and reflects internal problems at these businesses rather than softness in demand for mobile video services.”

In 2011, companies that focused on providing the technologies that enable mobile video delivery once again reported the strongest revenue growth.

A number of companies that SNL Kagan used to track for this report were acquired or shuttered in 2011.

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