Explosion of Online Video Services is Creating Massive Competition in the Video Industry

Generally, consumers choose a pay-TV service that provides the most complete choices for their desired content, and this becomes their core TV service. Historically, traditional pay-TV services filled this role and were often the only choice consumers had. The relatively recent explosion of online video services offering consumers additional content, usually at a lower price point and without contracts, has created serious competition.

Online pay-TV services enable subscribers to “layer on” additional channels not available from their core TV service. The affordable price tag of online pay-TV services has led to a willingness of consumers to pay for multiple subscription services to acquire the content they want. Now, 82% of US internet households have at least one OTT service according to our research.

How consumers obtain these services is telling and helps understand how consumers view the very fragmented OTT service market:

• 59% of OTT subscribers prefer unified bundles that combine their OTT services and other household subscriptions.
• 48% of OTT subscribers feel their home internet service provider adds more value when online video services subscriptions are offered.

Traditional pay-TV services have maintained their hold on consumers because they traditionally were the only pay-TV source for highly desired content, for example, local broadcast channels. With online video pay-TV providers now finding solutions to the challenges they face in providing highly desired content, they are in a better position to assume the role of the core service provider. When first launched, Fubo TV offered subscribers content hyper-focused on sports. Fubo TV has since evolved to provide a much wider range of entertainment and news options to increase its appeal and ability to compete for subscribers.

“Consumers who subscribe to online sports services or those who subscribe to a premium pay-TV sports package are more likely to livestream,” said?Paul Erickson, Director of Research, Parks Associates. “Right now, sports content is key to drawing and keeping an engaged livestream viewer base. Even with content that benefits from live consumption – such as news and concerts – significantly fewer consumers are livestreaming this content compared to sports. The sports audience is significantly more engaged in livestreaming as a whole.”

According to Parks Associates research, 43% of US internet households have livestreamed online content in the past three months, with sporting events by far the most popular type of content. Sixty-one percent of livestreaming users have recently watched a live sporting event online, while newscasts, the second most popular type of content, captured only 36% of livestreamers. Parks Associates’ recently published consumer study ?Quantified Consumer: Livestreaming: The Next Hot Video Market? examines the uptake of livestreaming video, the different types of live content that drive consumption, and the platforms and services used for this content.

This evolving environment underscores how critical providing an optimal channel package at the right price is to these video service providers. For both service models, gaps in channel offerings must be addressed to remain competitive, maximize customer retention, and create a stable revenue stream. Traditional pay-TV service providers now offer online pay-TV services and online pay-TV services are now offering local broadcast channels in many cities, enabling them to compete with traditional pay-TV options.

Ultimately consumers will define the pay-TV service winners and losers based on their ability to evolve and best meet their consumer demands. ??The evolution of video is fully underway and there is so much opportunity for the many services and industry players vying for the next generation of video viewers.

Parks Associates surveys 10,000 US internet households each quarter, tracking the adoption, use, and perceptions of connected devices, video distribution, and pay TV and OTT services. For more information on our consumer research in the entertainment and broadband industries, visit www.parksassociates.com

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