The OTT video market is maturing, as services adapt to a consumer base that is more intentional and more focused on value and simplicity.
From 2021 to early 2022, the OTT video market showed signs of maturation, a contrast to the rapid growth and adoption shown over 2020. Subscription growth slowed as consumers faced a glut of service choices and inflationary pressures become more intentional in their subscription choices. The market is in the midst of change to adapt to these conditions.
Services are innovating and now embracing hybrid business models as a necessity for sustaining future subscription and viewership growth. Ad-supported lower-cost tiers are becoming more normative – even for premium services. Ad-supported standalone services (FAST and AVOD) have rapidly become an engine of growth in the market, with free propositions able to reach consumer segments formerly untapped. Slowdowns in revenue growth amidst growing competition are forcing services to tighten their finances in areas such as content acquisition costs and mitigating lost revenue from piracy and account sharing. An increasing number of subscriptions are driven through service provider bundling and aggregators, aiding consumers seeking convenience and less complication.
As the OTT market matures post-pandemic, services will need to compete harder for consumers and will be forced to innovate and evolve in order to keep on the path to ROI. Ultimately growth and retention may lie in providing simplification of an overwhelming mix of services, content, and billing relationships that consumers now face, and in offering solutions tiered to multiple levels of affordability.
Parks Associates tracks NPS scores across all connected products and home services offered to consumers. Net Promoter Score (NPS) is a metric that measures customer satisfaction and loyalty.
vMVPDs’ Net Promoter Scores are dramatically higher than traditional pay TV providers; smaller vMVPDs have higher satisfaction than the leaders. The market’s leaders with more generalized propositions currently trail smaller niche players with specific content portfolios and/or lower pricing in customer satisfaction. All service providers have seen some dramatic drops in NPS from just 6 months ago. However, these scores are still much higher than traditional pay-tv service providers, who have NPS scores in the negatives.
As the year ends and service providers set their 2023 strategy, it will be interesting to see what our research work in the next 6 months reports for NPS.
“How likely is it that you would recommend [Organization X] to a friend or colleague?”
This is an excerpt from Parks Associates Video Services Dashboard, an ongoing research service that provides a visual representation of the most critical indicators used by organizations that provide video services to the home. The service includes insights from Parks Associates survey work of 10,000 internet households.
Video Services Overview
- Penetration of Traditional vs. OTT Video Services
- Pay-TV & OTT Service Subscription Trend
- Pay-TV & OTT Service Subscription Mix
- Pay-TV Services (Slide 14-20)
- Pay-TV Adoption by Service Type
- Traditional Pay-TV Service Provider Market Share
- Overall vMVPD Service Adoption
- Traditional Pay-TV Service Provider NPS
- vMVPD Service NPS
- Intention to Make Changes to Pay-TV Service
- OTT Service Use by Business Model
- Number of OTT Service Subscriptions
- OTT Service Subscription: Big 3 OTT vs. Non Big 3 OTT
- Major Subscription OTT Service Adoption
- vMVPD Service Adoption
- Method of Subscribing to OTT Service
- OTT Subscriber Churn
- Use of Ad-Based OTT Services
- Use of Transactional OTT Services
- Preferred Method of Watching New Movies
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