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With existing players like, Apple TV, Netflix, Hulu, XfinityTV, Boxee, and emerging players like Amazon, the Over-the-Top (OTT) space continues to grow. Consumers are exposed to more and more options and these options are cheaper! According to a recent Compete survey, 15% of consumers are not at all likely to subscribe to PayTV service in the next 6 months. This is a powerful number and only expected to grow. So what does this mean for the traditional MSOs and PayTV?
Well on one hand, many MSOs are trying to get in the game and are offering OTT solutions of their own. For instance, Verizon recently announced it’s joint venture with Redbox. While all the details have not been released, Verizon is one of the first MSOs to offer an OTT solution to non-customers. Similar to Verizon, back in the spring of 2011, Dish also announced an OTT venture, acquiring Blockbuster. In September, Dish released Blockbuster Movie Pass (now called Blockbuster@Home), exclusive to only Dish customers. At $10 a month, Dish customers have access to content by mail, PC, Gaming Console, Store, and TV. So how has DishOnline.com performed since its increased focus on OTT content?
It seems Dish has benefited from its Blockbuster acquisition and revamping DishOnline.com, however, in January, Netflix.com received 48X’s the amount of unique visitor traffic than Dishonline.com. It is evident that Dish has been successful at engaging existing customers – as the number of videos viewed per visitor is approaching market leader Netflix, but is it limiting the scalability of DishOnline.com by not allowing non-customers to have access? Verizon and Redbox may be onto something by extending their future offer outside of the Verizon customer base.
While one approach is joining the OTT party, the other is to combat it by coming out with a competitive TV offering. With recent releases of efficiently priced TV packages like Comcast’s “MyTV Choice” and Cox’s “TV Economy” cable MSO’s are well aware of the demand in the market for cheaper Pay TV solutions and rightfully so. According to a Q3’11 Compete survey 61% of consumers feel that they are paying too much for their TV service. Even more compelling 77% of consumers stated that there are channels in their TV package they have never even viewed!
While it is clear that a cheaper solution is crucial, this is uncharted territory for traditional cable providers. There has been a lot of talk in the market around an A La Carte solution, with ideas ranging from Pay per Channel to Pay per Time Viewed strategies. But what are consumers likely to react to? According to Compete, it seems consumers may want to meet somewhere in the middle. While 65% of consumers have interest in an A La Carte style offering they are not quite ready to select every channel.
As we can see there is a lot of turbulence within the TV space. It would be interesting to look at who is turning these “threats” into opportunities. Who is successfully getting into the OTT market without cannibalizing their PayTV customer base? What are best online practices in marrying PayTV offers with OTT solutions? Are PayTV customers who engage with OTT content stickier? Are online telecom shoppers researching OTT solutions throughout their shopping process?