ABI Research to MVPDs: Come with OTT if you want to live

Pay-TV operators like Comcast (NASDAQ: CMCSA), Dish Network (NASDAQ: DISH) and Liberty Global, which have been ahead of the curve in integrating over-the-top services into their portfolios, are best positioned among MVPDs to maintain growth as the overall pay-TV market stagnates over the next five years.

This is the conclusion of ABI Research, which projects that the pay-TV industry will experience moribund 3.7 percent compound annualized growth rate through 2020. ABI predicts OTT services, meanwhile, to have 24 percent CAGR through 2019.

"Comparatively high priced pay TV bundles are losing customers to more inexpensive, IP-delivered content," said Eric Abbruzzese, an ABI research analyst.

Operators like Comcast, which are among the first to integrate streaming video features similar to those found on Netflix (NASDAQ: NFLX) into their video service environments, "can expect strong returns--as much as 10 percent higher ARPU than the legacy technology--while those introducing the technology later will struggle to see similar success," Abbruzzese added.

The analyst says OTT services like Dish's Sling TV and BSkyB's Sky Go will not only allow these pay-TV companies to compete head-on with insurgent online video threats, but also enter new service areas without incurring significant cost.

"While pay TV will continue to hold market majority going forward, the best chance for positive growth in the pay TV space lies in the implementation of OTT capability in both standalone and IP-enabled STB capacities," Abbruzzese said.

For more:
- see this ABI Research press release

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