Online subscription TV spending set to surge
Pay TV operators will dominate the growing market for online subscription TV, signalling ‘the end’ of the first phase of online viewing which saw the rise of platforms such as Netflix and Youtube, according to Strategy Analytics.
The 2013 Global OTT Forecast highlights the rise in online subscription TV as the principle driver for OTT spending growth over the next five years. It also notes that while online ad supported and subscription VoD spending have started to scale in leading markets such as the US and some European countries, online subscription TV is only just beginning to make an impact.
Strategy Analytics predicts that global spending will reach $4.7 billion in 2018, concentrated in North America and Western Europe.
Ed Barton, director of digital media strategies for Strategy Analytics, describes the shift as a “new phase in the evolution of TV distribution” over the internet.
“Pay TV service providers are recognising the defensive imperative in ensuring they have a major say in the development of online TV,” Barton said.
“Standalone online subscription TV addresses the holdouts who will not be swayed by traditional premium TV offerings by promising high quality content including, crucially, live sport, shorter commitment periods, a lower cost of entry and much simpler installation and hardware requirements than traditional, ‘full fat’ pay TV services.”
Strategy Analytics predicts that the most successful online TV subscription services will come from pay TV service providers “leveraging existing content rights and broadcaster relationships” with the UK’s Sky.
However, Barton admits that there are a number of issues that the TV market needs to work through.
“Content rights and windowing will be impacted on a territory by territory basis while deployments will need to be designed in order to minimise cannibalisation of the core pay TV business,” said Barton.
“We expect to see bundling of online TV subscriptions with network access deals and device sales in the drive to build customer numbers. Once these services are established in the marketplace spending will accelerate and that is when we will see the extent to which online subscription TV can truly impact the huge spending volumes pay TV delivers today.”