The publication a few days ago of the latest figures of Pay TV Operators in the US shows a radical acceleration of cord-cutting, writes Raphaël Porte, Chief Business Development at Alchimie. According to Leichtman research, the legacy pay-TV business nearly lost another million of subscribers in the last quarter. Even if the third quarter is not usually the best, such a loss is a new signal of change.
Hopefully, the skinny bundles proposed by Dish and Direct TV have allowed them to limit their loss. Taking into account YouTube TV, Hulu and Vue, the pay TV business in the US is quite stable, only the ARPU might be decreasing. Since 2008, although the number of available channels in the US almost doubled (from 129 to over 200), households were still watching 17 channels. With new OTT generalist and thematic offers, no doubt this will begin to decrease.
This cord-cutting phenomenon is coming at a time when OTT offers are proliferating in the US. In 2016/2017 another 60 new OTT services where launched in the US, while only 7 did stop operations. The parallel between the decrease of legacy pay TV, the increase of skinny internet-delivered bundles and the number of new niche channels is clearly showing a change in the TV user behavior: since they have now a real choice, they choose. They are not locked by big bundles and they spend their TV money in the offer they need.
Netflix month-on-month performance is hiding the strong results of niche channels such as Gaia, self-claimed “Netflix of Yoga”, which gained 30,000 OTT clients in the US on this segment or Accorn TV, with 30,000 net adds over the past quarter
Actually, Netflix month-on-month performance is hiding the strong results of niche channels such as Gaia, self-claimed “Netflix of Yoga”, which gained 30,000 OTT clients in the US on this segment or Accorn TV, with 30,000 net adds over the past quarter. This rise of OTT is really bringing to TV viewers the opportunity to choose the content they want to watch, and to emerging actors the opportunity to propose new kinds of entertainment.
The proliferation of new OTT platforms gives to those different niche offers multiple ways to access the living rooms. Thanks to digital platforms like Amazon channels, to smart TV platforms like Roku, Samsung, LG, playstation or android TV, and to new internet-delivered bundles, all US households can find an access to their favorite passions, unlike proprietary legacy set top box.
Beside the fight between Netflix and Amazon Prime, OTT is not only a matter of reducing the TV bill or bringing TV anywhere, it is also the emergence of new offers that fit the needs and passions of the clients. The fact that, by essence, OTT is international, allows those niche offers to find their audience in the different countries and to gain commercial traction through multiple platforms. However, to cope with this fragmentation of platforms, smaller actors will need the help of master content aggregators, to help them reach new platforms for thematic channels.
About Raphaël Porte
Raphaël Porte is Chief Business Development at Alchimie. He is in charge of international distribution across all platforms and global partnerships.
He founded in 2011 the first french OTT operator, partnering with major French and international content providers as well as Telecom Operators and Retailers. He was previously marketing and retail director for NUMERICABLE/SFR and marketing and sales director for Canal+ in Africa then in Poland.