Pay-TV Revenue On Downswing; OTT Rising Up

The tide is turning.

Once considered merely an “early adopter” offering, over-the-top services are poised to come into their own and earn some big bucks.

Pay TV revenues peaked two years ago and are now on the drop, at the same time that over-the-top revenues have begun to significantly grow, according to a study from Digital TV Research. The research firm found that over-the-top revenues are on pace to surpass $10 billion in 2020, up 52% from $6.85 billion last year. That’s more than five times growth from the over-the-top revenue realized in 2010, which was about $2 billion then.

Meanwhile, Digital TV Research reports that pay-TV revenues will fall to $90.71 billion by 2020, a 12% decline from its high of $102.86 billion in 2013. The decline in the next few years will occur as overall pay-TV household penetration falls. In turn, the growth in over-the-top revenue will likely come from existing pay-TV subscribers as they transition to procuring their content through their broadband service rather than via multichannel video services.

These findings underscore the reach that services like HBO Go are starting to have, as well as the potential for new unbundled fare from CBS, Showtime and ESPN. Over-the-top services were once merely a quirky offering used only by cutting-edge early adopters. However, this report suggests that the a-la-carte viewing world long ago predicted may be on track to come true.

Online subscription VOD will rise as will download-to-own revenue, Digital TV Research said.
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1 comment about "Pay-TV Revenue On Downswing; OTT Rising Up".
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  1. Leonard Zachary from T___n__, March 24, 2015 at 12:53 p.m.

    Piracy is a major driver for the fall-off in payTV with younger audiences. It will be interesting to see what the uptake will be with multiple me-too digital platforms offering video content. Major broadcast TV networks are committing a unique form of "Seppuku" by bringing their content to multiple digital platforms enabling audience fragmentation on an order of magnitude that is not a long term strategy for their future.

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