Commentary

Over-The-Top Video Poised to Soar

Now the media industry has an even bigger reason to fret about cord-cutting and cord-shaving. With ESPN’s decision to begin offering an over-the-top package for its service, joining the likes of HBO, the prospect of snipping the cable cord just became compelling for even more consumers.

Already, many viewers have begun shifting their viewing to other devices. For starters, the number of video views on smartphones and tablest has more than doubled in the last year, according to the Ooyala third-quarter video index from 2014. The video platform provider predicts that mobile devices will comprise half of all video views later this year.

The younger crowd is driving this change, since 18- to 34-year-olds often favor time-shifted and cross-platform TV as well as online video services. Ooyala also noted that Millennials spend about a third of their TV-watching time using laptops or other connected devices, further underscoring the shift away from traditional modes of consumption.

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All signs seem to point to continued growth in over-the-top services. Over-the-top video revenues are on pace to surpass $10 billion in 2018, up 72% from $5.8 billion in 2014, the Ooyala report said.

Additional services like Netflix, on-demand, and even DVRs, are playing a part in fueling this change since they emphasize the convenience factor that has helped drive over-the-top growth. Consider this: 76% of US homes now have a DVR, subscribe to Netflix or use video-on-demand from a multichannel service provider, while one-quarter of homes use two of those services, according to Leichtman Research Group. In addition, 36% of cable customers have Netflix. That compares to nearly half of non-subscribers, indicating the far-reaching usage of the most popular over-the-top offering among both cable customers and cord-cutters.

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