Over-the-top video providers are not yet an adequate substitute for traditional pay TV, at least in the United Kingdom, according to Ovum. Instead, OTT video is complementary, and used for “catch up TV” or for movie viewing.

Based on a survey of 3,000 U.K. broadband users about over-the-top providers Amazon, Apple, BBC, Google, Hulu, Netflix, Samsung, Sony and Xbox Live, Ovum argues that “although OTT TV services now more closely resemble those of their network-based competitors, they have a long way to go before they can match the quality and breadth of content of traditional pay-TV offerings.”

While we expect OTT to become increasingly integral to the home video entertainment mix, there’s little evidence yet of consumers dropping their pay-TV subscriptions in favor of purely operator-independent solutions,” says Jonathan Doran, principal analyst at Ovum. “For the time being, OTT will remain a complement rather than an alternative to pay-TV.”

This is supported by Ovum’s consumer insights research, which shows that half of consumers with connectible video devices, such as PCs, tablets, consoles, smartphones and smart TVs, are using OTT services to catch up on TV or watch movies.

However, these services have yet to displace traditional forms of consumption, with more than half of these users still subscribing to pay-TV services.

What remains unclear is when a significant break will occur. The highly-political TV business necessarily is shaped by the rival interests of distributors and content owners, and the modes by which content owners make their money.

Right now, that means not disrupting the cable, satellite and telco subscription TV distribution channel, which represents something on the order of $30 billion in annual fees paid by distributors to content networks.

The networks understandably will not be anxious to destroy that business in favor of an online delivery method until they are assured the revenue they earn will at least be comparable to what they already earn.

On the other hand, all of the infrastructure and consumer habits required to support online delivery are steadily improving. But there still has not been a breakthrough event that signals the financial conditions finally have completely ripened for a big move by content owners into online delivery.

Whether Apple will provide the catalyst, as it has for music distribution, remains to be seen. But Apple is more likely to succeed than any of the other potential providers.

Join the Conversation

Leave a Reply

Your email address will not be published. Required fields are marked *

Don’t Miss Any of Our Content

What’s happening with broadband and why is it important? Find out by subscribing to Telecompetitor’s newsletter today.

You have Successfully Subscribed!