Pay-TV subscriptions and revenues are on a continuous decline as consumers embrace OTT services. The research firm forecasts that traditional pay TV will decline to 76.7 million households by 2024, the lowest penetration in a decade and a 27% drop from 2014. Parks Associates estimates that approximately 35 to 40 new streaming services entered the market between March 2020, the beginning of the COVID-19 pandemic in the United States, and the end of 2021.
More than half of US broadband households now combine one of the Big 3 services with at least one other subscription OTT service to form their online video service portfolio. Highly comparable content offerings and pricing from other large services and the continued adoption of mid-size and smaller services to fulfill niche content needs have contributed to this change in service stacking.
Adoption of the conventional Big 3 services has slowed, and acceptance of newer service offerings continue to grow. Managing multiple video service subscriptions – rather than just a single pay-TV service subscription in the legacy model – is a pain point for consumers.
There has been substantial innovation over the years, but streaming’s debut changed the trajectory of the modern video service industry. The evolution of streaming video has given consumers immense choice in how, when, and what they watch. The ease of trialing, subscribing, and cancelling services has created new dynamics and challenges for content companies and service providers.
Traditional pay-TV companies are making their move to streaming and are rebranding, making big acquisitions, and forming new partnerships. As they enter the streaming market, new OTT services join more than three hundred direct-to-consumer streaming services in the US market alone, which are tracked monthly with Parks Associates’ landmark service The OTT Video Market Tracker.
With so much choice and no long-term contracts for streaming video services, churn across all OTT service providers is increasing, and services are struggling to retain their viewers. Parks Associates data indicates that OTT subscription services average a 48% churn rate in the first quarter of 2022, which is a ten percent increase in just two years.
This research excerpt is from Video Services: State of the Market. The traditional pay-TV market continues to face significant challenges including ongoing subscriber erosion and competition from vMVPDs. The market has had to pivot to vertical integration and bundling, aggregation, and online video solutions to sustain and grow.
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