Thursday, August 6, 2009, 9:40 AM ET|Posted by Will Richmond
Continuing a past VideoNuze practice of making key data available from industry research firms, today I'm pleased to provide a dozen excerpt slides from The Diffusion Group's recent study, "Consumer Interest in OTT Video Services." TDG is one of the leading firms studying broadband adoption and shifting video consumption habits (and is also a long-time VideoNuze partner). These slides are from TDG's Q1 '09 proprietary survey of 2,000 U.S. adults, the results of which have only been shared with its paying clients to date.
"Over-the-top" is an industry term for any video provider (e.g. free, paid, on-demand, live, streaming, etc.) using the broadband infrastructure of an unaffiliated ISP to reach their intended audience. Since most broadband ISPs are either cable companies or telcos who also offer their own subscription multichannel video services, the idea is that these new services (e.g. Netflix, YouTube, Hulu, Amazon VOD, etc.) are provided "over-the-top" of these broadband/video incumbents, directly to broadband-enabled audiences.
With the proliferation of convergence devices (e.g. Roku, Xbox, AppleTV, etc.) OTT video is increasingly getting all the way to viewers' TVs. Many of you have heard me talk about how powerful and unprecedented broadband's "openness" is in the traditionally tightly controlled video industry. Like the Internet itself, broadband's openness is foundational; it has enabled a totally new and free-flowing relationship between video content providers and viewers.
There's been no shortage of buzz that OTT providers could disrupt the multibillion dollar per year subscription TV business, enticing subscriber's to "cut the cord" on incumbent cable/telco/satellite providers. I've weighed in multiple times on the likelihood of cord-cutting, originally laying out my arguments last October in "Cutting the Cord on Cable: For Most of Us It's Not Happening Any Time Soon." With cable's TV Everywhere services now gaining steam, I think the likelihood of cord-cutting en masse is even more remote.
Nonetheless OTT remains a genuine long-term threat for many good reasons. So TDG's survey is a welcome effort at quantifying consumers' potential interest in OTT services, at various price points and in multiple types of offerings. TDG identifies 4 audience segments: "Replacers," "Supplementers," "OTT Optimals," and "Non-OTT Consumers." The survey tests demand for paid OTT services at various price points, revealing each segment's willingness to pay. Each segment is motivated by different reasons, meaning that OTT service providers are going to have to be very disciplined about understanding who exactly they're targeting and how to generate appeal.
No doubt there will be plenty more research on OTT and cord-cutting yet to come. For anyone thinking about these market opportunities, I think the TDG research is very useful.
Video Research Around the Web
- Cord-Cutters Show Interest in Discovery Channel: Survey Multichannel News
- Pew: Mobile Broadband Users Double Since 2013 Multichannel News
- D2C Advertisers See Sharply Higher TV Ad Spending Mediapost
- Forecast: OTT Revenues To Hit $23.7 Billion By 2023 Mediapost
- Data-Enabled TV Buying Rises, Despite Concerns Mediapost
- Netflix Again Blows Past HBO, Others as No. 1 Pick for ‘Best Original Programming,’ Survey Finds Variety
- Cord-Cutting Got 75% Worse in Q1, Most Terrible Quarter Ever for Pay TV Multichannel News
- Many 4KTV Owners Don't Use Advanced Content Features Mediapost