ABI Research: Online video seen as multi-billion dollar threat to pay TV revenues

The old cord-cutting argument has come around for another turn thanks to the ABI Research Technology barometer study that says cord-cutters--or at least consumers who dump pay TV for online video--could cost MVPDs (multichannel video programming distributors) about $16.8 billion.

The research predicts that U.S. pay TV household penetration will decline about 0.5 percent per year through 2017, even if the economy recovers, because "consumers have additional entertainment choices like improved online and over-the-top (OTT) video experiences."

It could be said, of course, that many MVPDs are already following ABI's advice on how to combat this trend via their own OTT-like services, or what ABI calls "lightweight Pay TV offerings."

"Dish Network acquired Blockbuster with the goal of capturing online market share against Netflix; however, they failed to license adequate content and have admitted this strategy has been a failure," an ABI news release said. "Verizon is the next U.S. operator to target this dual-pronged approach, based on their Redbox Instant partnership. European providers, including ViaSat's Viaplay offering and SKY's recently launched NOW TV are also looking at lightweight pay TV offerings."

These offerings "should be to introduce customers to the brand and tease customers with premium content offerings," Sam Rosen, practice director, TV and video at ABI, said.

Additionally, the ABI Research material says there is an opportunity for pay TV providers to actually make hay at the expense of the OTT players because 30 percent of online consumers have the foundation in place for OTT services but don't "yet see the value proposition for online video," the ABI news release said. "This group is ripe for building and positioning services."

For more:
- ABI Research issued this news release

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