As over-the-top (OTT) streaming video services continue to gain prominence, broadcasters, publishers, content owners and service providers are witnessing an explosion in the number of households that are cutting the cord. Wall Street research firm Pacific Crest reports that the number of households with cable has fallen 10 percent in the past five years, while the number of households subscribing to OTT services has skyrocketed.
According to The NPD Group’s “Connected Home Report,” more half of American homes today have at least one device capable of streaming OTT content. NDP’s report shares statistics regarding consumer devices that stream OTT content, such as TVs, tablets, smartphones, computers, video game consoles and more.
According to the data, 52 percent of all U.S. homes with Internet access have equipment that streams video directly to their televisions. In fact, most households don’t stop at just one device – the average family today has about three video streaming devices.
The research broke down the devices into four categories: Blu-ray players, smart TVs, video game consoles, and streaming devices such as Apple TV and Roku. While game consoles were the most widely used, streaming players grew at a faster rate. Overall, the number of homes with streaming devices is up by 6 million over numbers seen in the previous quarter.
Switching from Traditional Cable
In their report “The Revolution Will Not Be Televised,” Boston University noted many consumers have started to question their traditional cable subscriptions. The average cable service costs $99 per month, and that price is increasing. What’s more, consumers generally watch only 17 of the 200 available channels provided by cable.
“Everyone keeps talking about how TV viewership numbers are going down, but these new connections and relationships and technologies are allowing people to watch more,” Amy Young of CBS Networks told Boston University. “Average viewership jumps 88 percent when you look at the full 35-day multiplatform window versus live and same-day viewership.”
Instead of paying high prices for cable, consumers are flocking to streaming content provided on a subscription billing model. They’re choosier about the programming they watch and would rather spend less money for specific titles as opposed to a lot of money for television they don’t enjoy. The numerous OTT content providers and devices only makes the transition for cable easier. As The NPD Group reported, such devices are one of the fastest-growing methods of watching videos online
Why Subscription Billing?
For broadcasters, publishers and service providers, a subscription-based model for OTT delivery provides a number of important business benefits, including:
- Predictable revenue streams. Consumers who subscribe to the OTT services pay for them automatically on a regular basis.
- Price and promotion flexibility. Providers can continuously refine the way they price and promote offerings to maximize customer acquisition and retention.
- Long-term relationships. Once consumers have subscribed, they are less likely to switch to competing offerings, as long as the service provider continues to maintain a high-quality user experience and continue to deliver appealing content.
- Control over the customer experience. OTT service providers can build stronger relationships by improving the way subscribers access content across their various devices.
OTT Device Popularity
A study by Strategy Analytics found the most popular brands for streaming OTT content are the Apple TV and Google Chromecast. The study found that Chromecast ended the year stronger than Apple TV, despite having lower sales overall. The Google product made up 35 percent of the 42 million streaming units shipped. Apple TV came in second place, followed by Roku and Amazon Fire. Ultimately, however, Apple leads the pack with 37 million devices shipped since 2007. Chromecast sold 27 million during the same time period, and it is quickly catching up.
With each passing year, OTT content providers will continue to gain traction as more and more consumers see the benefits of switching from traditional television services to streaming services. Viewers get to pick and choose the shows they’d like to see rather than be subject to the schedule and programs of a major cable network. And service providers gain from the multiple benefits of the subscription business model.