The number of consumers getting their video programming from over-the-top subscriptions only will grow over the next five year to more than 15.5 million subscribers by 2024, according to a new report from Concentric, a simulation software company.
Driving the growth of OTT will be live sports and other live programming, followed by news, the report said. If OTT providers manage to integrate live content into their offering, one in four people will cut the cord with traditional pay-TV by 2024. With current content offerings, about 13% of viewers will cut the cord in the next five years.
Concentric expects cable to decline by between 2% and 14% depending on how quickly they incorporate streaming options into their offerings. To compete in the new environment, cable will have to offer lower prices, more customized packages and improved ease of use.
Satellite is on the decline and Concentric estimate its will lose another 8% of its subscribers in the next five years.
“As the popularity of streaming services continues to grow over the next five years and beyond, it seems clear that OTT services is where the industry is headed. OTT providers alone are both growing at a rapid clip, and bolstering the success of the other services they’re bundled with,” the report said.
The report notes that things are not that bleak for cable. Cable enjoys a huge market share and that share is too big to be challenged by OTT only over the next five years. Cable and other traditional providers can be successful by implementing streaming options, it said.
“In fact, all types of companies stand to gain from the growth of OTT services if they can combine them with a better user experience," Concentric said. "Whether it’s creating more-competitive pricing structures or more-desirable content, the data shows that consumers will follow the best service. Even technology companies like Roku, Apple, and other smart TV manufacturers have a role to play in this transition if they unify the content and improve the ease of use in accessing that content. Ultimately, the players that move quickly to respond to the needs and wants of the consumers will avoid stagnation and a slow decline into obscurity.”
Concentric’s estimates are based on a simulation of consumer choices among alternatives for viewing entertainment content. It used industry data, a consumer survey of 1,000 consumers and its own industry knowledge to build its simulation.