Video Services, Pay TV, and OTT

by Parks Associates | Jan. 18, 2012

Consumer viewership of online video dramatically increased in the past few years, and this trend will continue in 2012. Nearly 70% of U.S. broadband households viewed online video on their PCs at least monthly in 2011, compared to 38% in 2006. Netflix recently announced that its members around the world viewed more than 2 billion hours of content in Q4 2011 alone. Consumers acquired an increasing number of platforms they can use to watch digital video. Throughout the course of 2012, households will consume more and more video on mobile devices like tablets and smartphones.

In the past twelve months, 12.7% of U.S. pay-TV subscribers downgraded their pay-TV service. This trend will impact ARPU and overall revenues and resonate throughout the content ecosystem in 2012. Operators will continue to explore new and creative ways to monetize their investments in VOD and multiscreen delivery systems.

Providers rapidly expanded their multiscreen services in 2011 as a deterrent to subscriber and revenue loss due to online video and OTT services. By mid-2011, 80% of U.S. pay-TV subscribers could receive on-demand content on a non-TV screen in their home through a service provided by their pay-TV provider. Growth in multiscreen services will continue in 2012 despite implementation costs and unproven business models. By the end of 2012, the impact of multiscreen offerings on subscriber churn and business models will be clearer to operators.

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