tablet videoThe advent of OTT (over-the-top), direct-to-consumer streaming video services from pay-TV providers and broadcasters, such as HBO Now, CBS All Access and DISH’s Sling TV “herald in a new era in online streaming as premium, stand-alone services based on content once exclusive to traditional pay-TV,” according to market research provider Ovum.

“Until now, watching the latest Hollywood movies and TV shows has largely been the preserve of downloads, discs, and pay TV,” Ovum TV practice Senior Analyst Tony Gunnarsson is quoted in an Ovum press release. What we’re seeing in maturing markets such as the U.S. is that the audience is shifting towards premium linear streaming, which is augmenting well-established free on-demand services such as YouTube.

“Home entertainment is evolving as subscription-based VOD services reach the mass market: It is now commonplace to watch original productions such as Bosch from Amazon’s Prime Instant Video streamed to the main TV. The emergence of stand-alone – often linear – streaming propositions such as PlayStation Vue and Yaveo represent the first that truly substitute for traditional pay TV.”

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Total OTT Subscribers
These OTT stand-alone streaming video services will result in “the reassertion of the traditional TV value chain, pushing back against technology-led OTT specialists such as Amazon, Netflix, and Hulu,” Gunnarsson says. Furthermore, they will help push the number of of online streaming subscribers over the 100 million mark globally this year. Another 77 million video streaming subscribers will be added worldwide by 2019, Ovum expects.

Already fierce, competition across the “visual entertainment ecosystem” will intensify further, according to Ovum. “Services which fail to understand the increasingly complex array of choices available to the audience will struggle against those that address the need for connectivity, perhaps in hardware as well as content,” Ovum continues.

The increased competition will add substantial downward pressure on streaming video service prices, “as the multiplay offers will ruthlessly discount bundled services which lie outside the core business of the seller,” Gunnarsson continues. On the other hand, those content producers able to produce content audiences “crave” will see some upside.

Added Ovum’s Head of TV Research and Analysis Ed Barton: “We are on the cusp of the next major evolutionary growth phase in visual entertainment. As the industry hunts for opportunities to address slowing traditional TV subscription revenues, the major trends in technology, audience consumption, and service evolution offer glimpses of a brighter future.

“We see a shift in how TV is increasingly addressing individuals rather than households, and how the merging of online and broadcast advertising technologies and the ongoing hunger for true ‘Martini TV’ – any time, any place, anywhere – from the audience offers significant incremental revenue opportunities. The proliferation of linear SVOD from traditional TV is just one part of this shift which underpins our firmly held view: TV’s best days lie ahead.”

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