appletv_newCable, satellite and telco pay-TV providers are shifting their marketing efforts away from traditional and IPTV services and products towards live, linear OTT platforms that compete with market leaders Netflix and Amazon. Pay-TV provider OTT will generate $7 billion in live, linear OTT services revenues in mature pay-TV markets by 2021, according to ABI Research. That’s a big jump from  just over $1 billion today.

AT&T’s DirecTV Now service launch was the most recent example of pay-TV providers’ OTT shift, ABI VP and managing director Sam Rosen noted in a news release. The launch, or relaunch, of the live, linear OTT satellite video brand under the AT&T umbrella is a better fit when it comes to meeting viewers’ demand for more personalized, affordable “anytime, anywhere” video network access, he said.

“The services fit within carriers adopting mobile-first mindsets as mobile subscriber bases and revenues exceed fixed line revenues, largely due to per-consumer as opposed to per-household connections. This helps win the battle for exclusive content rights but poses strong technical challenges.”

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This last item includes the need for robust content management systems, video transcoding and storage pipelines and application ecosystems, as well as the ability to assemble adequate video distribution network capacity, ABI points out.

Pay-TV Provider OTT
AT&T, for example, bought Quickplay Technologies in order to enhance its ability to assimilate and expand on DirecTV and other OTT video initiatives. Similarly, Disney purchased an equity stake in BAMTech (formerly MLB Advanced Media) in order to gain more strategic control of its syndication platform, ABI notes in a press release.

“Despite the technical challenges, OTT services help pay-TV operators attract cord-cutters with a cheaper pay-TV alternative, as well as next-generation customers who never planned to subscribe to a traditional pay-TV service,” says Khin Sandi Lynn, Industry Analyst at ABI Research. “Live OTT services, particularly sports packages, continue to gain the most traction, as they allow customers to watch the same live programs that they receive through pay-TV services at a fraction of the cost.”

Parks Associates just yesterday (Jan. 18) releaesed market research that lends further evidence of the challenges incumbent pay-TV providers face from competing OTT services.

Parks determined that the share of “antenna-only” TV households with broadband connections has reached 15 percent. Coincidentally, Parks found that the share of pay-TV subscriptions had declined and Internet-only video subscriptions had increased.

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