Broadband Communities

Show Guide 2018

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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Page 106 of 111

BROADBAND COMMUNITIES SUMMIT 2018 105 Show Guide Sponsor perhaps the biggest change to the video market in 2017. Partnering with aggregators offers increased visibility while minimizing risk and marketing costs. Pay-TV services, both traditional and online, have noted this trend and have begun a push to be "one-stop shops" for all video entertainment by offering OTT services to consumers through their own platforms. They are using these partnerships to their advantage by offering enhanced user experience features such as unified interfaces and universal search to pull content from across different services. The decline in pay-TV subscribership and ARPUs can be partially offset if operators can effectively utilize their platforms to become marketplaces for video, an aggregation strategy that operators initially used to build their current pay-TV businesses. With more than 200 OTT services in the United States alone, competition for subscribers is fiercer than ever. In 2018, some services may begin to fold under the pressure. NEW BREAKDOWNS OF VIDEO-VIEWING AUDIENCE One significant impact in the increasing adoption and usage of OTT services is the creation of new divisions in the video-viewing audience. New groups are emerging in the U.S. market. • Cord nevers: 5 percent of U.S. broadband households have never subscribed to a pay-TV service. • Cord cutters: 15 percent of U.S. broadband households canceled a pay-TV service and instead watch movies and TV programs on an internet-connected device. • Cord shavers: 8 percent of U.S. broadband households recently downgraded their pay-TV service and supplement viewing with video on an internet-connected device. Emergence of new consumer segments has forced service providers to offer their own OTT services, either independently or through partnerships. Approximately 33 percent of cord cutters would have stayed with their service providers if offered a Netflix- style service bundled with broadcast TV channels. The variety of OTT services now available has also created significant differences in service adoption and usage among different demographic groups in U.S. households. • Overall OTT video service adoption is approximately 18 percent higher among Latino or Hispanic U.S. broadband households when compared to all U.S. broadband households. • Nearly one-half of Latino or Hispanic U.S. broadband households are "service stackers" and subscribe to two or more paid OTT video services. • Latino or Hispanic U.S. broadband households have the highest adoption of Netflix (65 percent) when compared to the national average. OT T AND VIEWING HABITS Among U.S. broadband households, 11 percent watch over-the- air broadcast TV channels via an antenna, and pay-TV service subscriptions fell from 87 percent to 77 percent between 2012 and 2017. The rise of OTT correlates to a decline in viewership for live, linear TV channels. In particular, the audience for over-the-air broadcasters has diminished over time, especially among younger heads of household. Pay-TV and OTT Service Subscriptions (2014-2017) U.S. Broadband Households © Parks Associates 100% 75% 25% 50% 0% OTT subscription only Both Pay-TV and OTT service subscriptions Pay-TV service subscription only Neither Service Q1/2014 Q2/2015 Q3/2016 Q3/2017 "Consumer expectations have changed. While many consumers are familiar with the pay-TV channel guide, the discovery tools and personalization elements of online services provide a better experience in an increasingly on-demand world. Operators must continually evolve the user experience or risk being made a secondary viewing option by viewers." – Brett Sappington, Senior Director of Research.

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