Parks Points

Consumers are still watching plenty of video, but there’s still some negative sentiment towards paying for video entertainment.

41% of broadband consumers surveyed find online video service subscriptions worth their money, but 33% do not. Additionally, nearly as many consumers surveyed prefer live TV as those who prefer recorded or on-demand TV. There is still an audience and money to be made in live content despite increases in watching on-demand content.

What do these facts indicate about what is forthcoming in the OTT video market space?

Business models in the OTT space continue to focus on subscription, transactional, and ad-supported monetization. More recently, services have diversified their business models, introducing hybrid models and multiple pricing tiers of service. We anticipate that these flexible business models will proliferate.

Virtual MVPDs, such as Sling TV, DIRECTV NOW, and Hulu with Live TV may be the new OTT frontier. They are well positioned for success with young consumers, particularly Cord Nevers, who are reluctant to invest in expensive pay-TV bundles. Young consumers have grown up around streaming media, consuming content through everything from Netflix and YouTube to Spotify, all of which are lower cost and lower commitment options. Virtual MPVDs offer low cost, no contract services, allowing consumers to sign up during big event spikes and cancel immediately. No hard CPE costs and lower customer acquisition costs make this feasible and provide a competitive advantage.