Where are all the cord-cutters? Without more attention to quality of experience from a user perspective, OTT will never truly compete with broadcast.
Despite the hype, online video is not poised to take over the television experience anytime soon. Yes, lots of people around the world are watching video-on-demand (VOD). In fact, according to a 2015 Nielsen study of 30,000 people worldwide, approximately 65 percent of respondents admitted to watching VOD content. That’s a pretty big percentage. But does this mean that people are “cutting the cord” or that consumers are trading in their linear broadcast signal for online video? Of course, some are making these choices, but a 2014 Nielsen study indicates that the average American watches 5 hours of broadcast television daily. And according to a 2015 study by Thinkbox Software, broadcast television accounted for 76 percent of all video consumed in the U.K.
So why aren’t consumers fleeing pay TV subscriptions in droves? It’s not because the value proposition for online video isn’t alluring— watch what you want, when you want, where you want. One could argue that consumers are canceling their pay TV subscriptions because of the price. OTT services offer significantly cheaper annual rates than traditional pay TV subscriptions. And even though consumers may need to purchase multiple OTT services to access everything they want to view (e.g., Sony PlayStation Vue, Hulu, and Netflix), they still aren’t paying for hundreds of channels they’ll never watch.
The reason can’t be broadband penetration either, as we’ve seen a significant increase in high-speed internet over the past year (14.1 percent globally in 3Q 2015, according to Akamai). Sure, pay TV does have one clear advantage over online video—the user experience. There’s only one remote and no need to switch between multiple HDMI inputs just to watch a program. And there are live sports and other events that are almost impossible to get outside of a pay TV subscription if they don’t belong to one of the four major sports categories. (The MLB, the NBA, and the NHL all have their own OTT services, and the NFL is considering one.)
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