CBS. Showtime. HBO. WWE. TuYo. NBCUniversal. These are just a few of the companies that have announced over-the-top TV subscription services since the beginning of 2014. Some like CBS All Access have experienced early success, while others like Showtime and TuYo are still in development with launches planned later this year. Why are there so many OTT services? That’s what viewers want, says EMarketer.com.In fact, in a 2014 study by Deloitte, a majority of U.S. pay TV subscribers preferred to subscribe only to the channels they watch regularly, rather than pay for a package of channels. In 2012, the split was 50/50.
In a Hub Research study published in April 2015, the three top OTT video-on-demand services – Netflix, Amazon Prime and Hulu – reported increases in subscriber activity over a two-year period.Netflix, which has the largest subscriber base of the OTT services, reported 40 million U.S. and 20 million international subscribers at the end of the first quarter of 2015. In addition, during that same time period, members streamed 10 billion hours of original series, movies, documentaries and other VOD offerings on Netflix.By comparison, Hulu has about 9 million subscribers, and estimates put Amazon Prime’s subscribers between 40 and 50 million. And, of course, some viewers subscribe to multiple VOD services. A study by Strategy Analytics shows that, of survey respondents, 40% streamed Netflix only, 36% streamed Amazon Prime only, and 23% streamed both.Insider Take:We anticipate that the OTT streaming video market will grow exponentially over the next two to three years. The demand for select programming that can be watched on any device from anywhere will continue to grow, particularly with Millennials who show a strong preference for cord cutting. Companies and networks that have not yet dabbled in OTT will leverage their unique programming to enter the OTT marketplace, hoping to expand their brand while adding a new revenue stream.At some point, however, the market will become saturated, and consumers will become overwhelmed with the number of choices offered by cable, satellite and OTT TV. They will have to make choices about where to spend their money and which entertainment subscriptions they want including OTT TV, print and digital books, magazines and newspapers, music, games, and more.Companies won’t be able to compete on price alone. The subscription companies who prevail will be those who have studied their target markets, tested products and price points, and provided exclusive content and a positive user experience.
