Pay TV operators must change to reduce online TV threat

The way people watch videos and television is constantly changing. This is clearly noticeable when comparing the number of people who watch television live to those who watch the same shows online at their convenience. As online TV services continue to emerge, this transformation will be an ongoing process in the coming years.

This trend was highlighted in a new report by ABI Research, which revealed that approximately 20 percent of online consumers now believe web-based video is a possible replacement for traditional Pay TV services. The study also said this change represents a serious risk to Pay TV’s recurring revenue stream, which is estimated to be worth as much as $16.8 billion in the United States alone.

Overall, the U.S. Pay TV market is estimated to decline roughly 0.5 percent annually through 2017, especially as more over-the-top (OTT) subscription video services offer additional entertainment options and better quality picture, ABI Research noted. As a result, Pay TV companies should either partner with OTT services or entice customers with small recurring payments and subscription offerings.

“While many OTT services focus on movies, the goal of lightweight Pay TV packages should be to introduce customers to the brand and tease customers with premium content offerings,” said Sam Rosen, practice director of TV and video at ABI Research.

The study also revealed that 30 percent of online consumers don’t yet see the value of web-based video services, which creates opportunity for Pay TV providers but will also make the marketplace more competitive. As this happens, decision-makers should consider leveraging an advanced subscription billing and management platform so executives can monitor customer activity and quickly adjust strategies to keep clients satisfied.

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Editorial Team

The Forrester Wave: Subscription Billing Platforms, Q4 2015

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