OTT will drive pay-TV growth over the next 5 years but push down ARPU, research firm says

Pay-TV operators around the world will aggressively deploy over-the-top services like Dish Network's (NASDAQ: DISH) Sling TV over the next five years to stave off cord-cutting, but these services will result in lower margins overall for the global industry.

"In a growing number of pay-TV markets, service providers are expanding market presence by offering their own OTT video services, primarily as apps on tablets and third-party OTT media servers," wrote Jeff Heynen, research director for broadband access and pay TV at IHS Infonetics. Dish Networks, the second-largest satellite provider in the US, is offering an OTT video service called Sling TV that's aimed squarely at cord-cutters and cord-nevers. The net result of these offerings will be slower revenue growth globally as OTT services carry a lower ARPU."

Heynen made his predictions in IHS Infonetics' latest Pay-TV services and subscribers report, also noting that the global pay TV services market, including cable TV, satellite TV, telco TV and over-the-top (OTT) video, grew by 7 percent to $237 billion in 2014.

The report also said that global pay-TV subscribers increased 5 percent last year to 800 million, with OTT services providing the biggest growth. 

Globally, cable TV growth slowed to 1.8 percent, largely due to contraction of the U.S. market, which has been shrinking at a rate of around 1 percent to 3 percent annually.

IHS Infonetics pay TV vs. OTT

For more:
- read this IHS press release

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