OTT Faces Challenges, Consumers Stay With Linear TV

Although proponents of over-the-top TV -- OTT platforms and services -- are seeing strong growth, there are some near-term impediments.

A new report from IPG Mediabrands’ IPG Media Lab and Magna Global says a major problem is diverse services that don’t work together: “The landscape is cluttered with different, incompatible ecosystems that are difficult to understand.” In addition, the report is concerned about limited flexibility for OTT services, given the legacy deals between traditional TV content providers and TV distributors -- especially when it comes to offering channel-by-channel deals in “a la carte” offerings.

Two other problems: Behaviorally, many media consumers -- while experimenting with digital media -- are still stuck on “linear” television consumption. IPG Media Lab says “baby boomers” in particular seem to want to hang on to the ways of the past.
The report also says high-speed communication technology isn’t consistent and/or widespread, especially in rural areas.

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Still, IPG’s sister division, MagnaGlobal, is estimating that traditional pay TV consumers -- those coming from cable, satellite, or telco -- will peak at 106.4 million consumers this year and then slide in the coming years, down to 104.7 by 2018.
At the same time, MagnaGlobal expects the 2014 footprint for OTT devices in the U.S. to be 47 million -- double that of 2013. U.S. smart TVs are expected to grow quickly -- almost double to 78 million by 2018 from 45 million today.

Future TV transformation will help OTT, as TV networks may evolve into other platforms.

For example, IPG believes that “TV networks such as Bravo or the Food Network may morph into subscription-based or ad-supported apps, with commerce opportunities to drive revenue, eliminating the need for the linear channel altogether.”
Cable operators may become closer to “app aggregators.” It also sees more direct-to-consumer content -- eliminating the need for “middleman” activities.

1 comment about "OTT Faces Challenges, Consumers Stay With Linear TV".
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  1. Nicholas Schiavone from Nicholas P. Schiavone, LLC, September 16, 2014 at 7:08 p.m.

    Wayne, Aren't you exhausted by conflicting sources looking for MediaPost bandwidth? First, OTT will decimate linear TV. Now, we need to think about holding a benefit that is "over-the-top" for those poor Apps. And those beleagured "boomers" are "stuck" on "linear" (as opposed to "circular" or "crooked?") because they are "hang(ing) on to the ways of the past." Breathing is a way of the past. Should we reconsider? But not to worry, TV networks may "evolve" and save us - like dinosaurs into birds? But what I can't wait for is the attack on the man-in-the-middle -- as opposed to the man-in-the-middle attack. My 3-part Verizon bundle started at $89.99 and in 4 years is now $149.99 - for no good reason. (However, my neighbors can now get a FiOS Triple Play for $79.99.) In sum, I guess IPG believes that world needs one more imponderable constructs: "app-aggregators." Then, OTT will be OK - and what could be better than that? Wayne get some rest and turn off the bubble machine. Nick

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