The Future of the OTT Platforms – Part III

In my first blog about OTT and the Pay TV ecosystem in November 2015, I made a prediction that the current Pay TV model will not change that rapidly because the business model worked very well for existing incumbent players (i.e. Cable companies plus Pay TV Programmers). Moreover, in February 2016 I followed it up with data that showed that cord cutting was less than expected.
Two and a half years later, Pay TV HH’s continue to fall at about 2% per year. At the same time, OTT users in the United States are getting close to 200 million users, which represents 84% of all internet users.

We can argue whether this rate of decline represents a fast or slow disruption, but if we see how users are consuming media, we do notice a very rapid shift in consumption. In other words, “cord-cutting” is definitely happening, but also users who continue to have a Pay TV subscription are nevertheless watching less Linear TV than ever before. In this sense, I believe the Pay TV disruption is happening faster than I envisioned two and a half years ago.

As a consequence, it’s not surprising that Digital Advertising has surpassed TV Advertising in the United States.

By the way, all these slides are borrowed from Digital Capital Advisors’s excellent Perspectives On OTT paper.

Another way to see the progress of OTT platforms is that they have become original content powerhouses as well. In the last Emmy’s, the quality and breadth of their content became evident:

• Netflix tied HBO in Emmy wins, putting an end to HBO’s 17 year winning streak. It marks the first time in Emmy history that a streaming company has joined a traditional broadcaster in taking home the most awards.
• Amazon Prime’s show “The Marvelous Ms Maisel” won Best Comedy, Outstanding Writing for a Comedy Series, and Best Leading Actress in a Comedy
• Hulu’s “The HandMaid’s Tales” won an Emmy for Outstanding Production Design and another one for Outstanding Guest Actress in a Drama series (Samira Wiley)

As a conclusion, Pay TV is being disrupted faster than I anticipated and the industry is acting accordingly. Large players such as ATT and Comcast are integrating themselves vertically becoming major distribution and content powerhouses. The next five years will surely be interesting in this frenetic and dynamic media world!