Pay-TV operators, with content relationships firmly in place, are in a good position to leap into the breach with a service that provides streaming, access to Web and cloud-based services via new access devices like connected CE.

"The sands are shifting as expanding numbers of households access their TV-displayed content online," said Tricia Parks, CEO at Parks Associates. "Methods include smart TVs and a host of connected devices, several of which are in a high-growth trajectory. This shift will create havoc with today’s well-understood TV revenue model potential. All players want a piece of that revenue, but not all players will hold their current positions over time.”

Netflix, a pioneer in the subscription video model, reached nearly 25 million subscribers by mid-2011, before its recent price increase. This deeply unpopular move, in which the company increased the price of its streaming and DVD-by-mail services by a full 60 percent, creates an opening for other service providers to compete for these subscribers on price and a wider selection of newer titles, she added.

Pay-TV operators have an advantage in the fact that their content partnerships are already firmly in place. "Licensing is one of the biggest challenges for providers in this space," Parks said. "A successful subscription model has lots of content options. [Pay-TV operators] must leverage their strengths as established providers, serving millions of households, to secure rights to premium content and combat encroaching over-the-top solutions."

From the article, "Pay-TV operators gear up to challenge Netflix " by Michelle Clancy

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