New OTT TV Gets Pricier

New over-the-top TV services may endure higher costs, which may raise costs for consumers -- especially when considering packages including major over-the-air broadcasting networks and their associated cable networks.

MoffettNathanson Research says the combined cost for most new OTT services -- factoring in audience “reach” of existing top TV networks -- is about $34 a month. This is largely because broadcast networks generally have a much higher reach than cable networks -- and would need to price their networks accordingly.

“Ultimately, this broadcasting network offering would have to trade-off much higher reach with higher prices to cover the cost of these networks, plus any other cable networks portfolios,” says the report. “We believe that the broadcast network owners are not dumb and will protect the economics of their hand.”



Efforts around the Dish Network’s Sling TV service are different, says the report, because they primarily focus on cable network packages. “We estimate the total cost for these networks is $18 [per month],” says MoffettNathanson. The initial cost to consumers for the basic Sling TV package is $20 a month.

The top 25 TV networks, broadcast and cable, in terms of viewership -- which in theory is what most consumers would want -- amounts to 75% of all TV viewing. Those 25 networks garner 57% share of all subscriber fees.

“Out takeaway here is pretty straightforward, the interests and economics of the industry make a la carte a virtually impossible task.”

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