Limelight: Content availability drives decision to cut the cord

The rising price of pay-TV services is still a leading factor in many consumers' decision to cut the cord and go all-OTT, but content availability is increasingly becoming a key part of the decision, a new study by Limelight Networks says.

The digital content delivery provider released its second-ever report on the state of the online video industry, a study it is conducting semi-annually. Limelight found that nearly 83 percent of consumers in four key countries watch on-demand video, a 4 percent increase over its last survey period in April 2014, and 36 percent of that group watch on demand more than four hours a week.

Limelight surveyed 1,271 consumers in the U.S., Canada, the U.K. and Australia aged 18 to 69.

Unsurprisingly, millennials are continuing to drive uptake of OTT services. More than 40 percent of those surveyed by Limelight said they subscribe to at least one SVOD service like Netflix (NASDAQ: NFLX) or Hulu, and 31 percent subscribe to two or more.

A recent Millennial Video Panel held by Jefferies bore out many of the findings of Limelight's report. Younger users are less likely to have a set-top box and cable subscription than older millennials, but they also are more willing to do the work needed to seek out specific content and create their own OTT-based subscription packages.

"Both Netflix and Hulu are valued, but for different reasons -- Hulu is primarily a vehicle for catching up on specific TV network shows, while Netflix's original content and deep show libraries (as opposed to movies) are highly valued," said John Janedis, media & entertainment analyst for Jefferies. "Live viewing of television is primarily restricted to sports -- even then, panelists suggested that they focus on less than 20 percent of the commercials that are broadcast."

Brian Pitz and Brian Fitzgerald, Internet market analysts for Jefferies, noted that content leads the way in choosing subscriptions. "Content was king with both groups and the services which can provide easy access were the winners. Google, Facebook, and Netflix are all beneficiaries of this with YouTube, Instagram, and Netflix being "go to" destinations for short and long form content."

With that in mind, Amazon's (NASDAQ: AMZN) recent decision to offer a unified billing service for third-party streaming providers to connect with its Prime subscribers becomes more clear. The move "could be a meaningful strategy to offer a la carte premium content through the Prime Video platform," the analysts added.

For more:
- see this Limelight release

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