OTT Growth to Carry the Pay-TV Market Forward

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The global pay TV services market is growing at a slow but steady rate, as over-the-top (OTT) video uptake balances out stagnating growth in saturated markets.

In all, including cable TV, satellite, IPTV and OTT video, market revenue totaled $237 billion in 2014, up 7 percent from the previous year, according to the 2015 IHS Infonetics Pay TV Services and Subscribers report.

Global pay TV subscribers ballooned to nearly 800 million in 2014 (up 5 percent); and for the first time, the OTT pay-TV segment provided the strongest growth. Unsurprisingly, this is a segment that’s expected to keep escalating: Through 2019, OTT pay-TV services are forecast by IHS to have the highest compound annual growth rate (CAGR) of any pay-TV service. Interestingly, it’s not just the Netflixes of the world that will lead the charge; new services from old players, like DISH Network’s Sling TV, will account for a healthy part of the expansion.

DISH, the second-largest satellite provider in the U.S., is offering what it calls a “skinny” OTT video service called Sling TV that's aimed squarely at cord-cutters and cord-nevers, with a core group of live TV channels and a selection of add-on packs.

That said, overall market revenue growth (if not subscriber growth) will start to lag.

"In a growing number of pay-TV markets, service providers are expanding market presence by offering their own OTT video services, primarily as apps on tablets and third-party OTT media servers,” said Jeff Heynen, research director for broadband access and pay TV at IHS. “The net result of these offerings will be slower revenue growth globally as OTT services carry a lower ARPU."

Moves like that may be important for the oldest incumbents in the field as time goes on: cable pay TV revenue growth slowed to 1.8 percent in 2014, largely due to sluggish subscriber growth in North America, where net video subscribers are declining around 1 percent to 3 percent annually.

For now, satellite and IPTV are leading the way.

"Pay-TV providers are…actively marketing 'skinny' bundles of 10 to 30 channels in more affordable packages," Heynen said. “Verizon has gone so far as to introduce multiple bundles of channels that subscribers can add on top of their base channels to create a custom channel lineup.”



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