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The pay TV industry is undergoing tumultuous change, as more and more US consumers ditch their cable and satellite packages and embrace digital video platforms, according to a eMarketer’s new report, “US SVOD and Linear OTT Services: Pay TV Alternatives Come into Focus.” (The full report is available only to eMarketer PRO subscribers.)
Taken at face value, this trend represents a gradual abandonment of pay TV as it is currently defined—that is, traditional TV service delivered over a cable or satellite connection. But at a deeper level, what’s really happening is a reallocation of consumer spending toward a growing wave of digital subscription services.
In essence, these new services are challenging the definition of pay TV.
To be clear, eMarketer is not changing its definition of pay TV, but we do see SVOD and linear OTT services as a new way of paying for TV programming.
A tracking study by Leichtman Research Group Inc. (LRG) documented the extent to which streaming services are intermingled with pay TV for US viewers. In January 2017, 51% of US adults with a TV set in their household had both a pay TV and SVOD service. The comparable figure in 2014 was 39%, and the percentage has increased gradually every year since, according to information provided to eMarketer by LRG president and principal analyst Bruce Leichtman.
OTT services span a broad spectrum of genres and business models, from services that carry multiple TV and cable networks for a fixed monthly fee—not unlike the cable and satellite bundles they’re competing against—to sports-oriented services to niche offerings as diverse as mysteries from the UK, aviation videos and documentaries.
There are more than 50 such services in the US, eMarketer estimates, and more are likely to come along as viewers continue to migrate from traditional to digital platforms.
However, the sheer volume of services raises the question of whether a shakeout is imminent. Another important question is whether this rising wave of OTT services can continue to meet the first criterion of many cord-cutters and cord-nevers: saving money while still getting the content they want.
eMarketer releases over 200 analyst reports per year, which are only available to eMarketer PRO customers.
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