Skip to main content

Video Entertainment Industry Disruption is Unstoppable

Ongoing disruption of the video entertainment industry is most apparent in North America, where incumbent pay-TV service providers continue to report significant subscriber declines. Past attempts to slow or reverse the customer losses have proven to be unsuccessful. Clearly, it's a huge challenge.

Furthermore, relatively new rivals in the sector, such as AT&T and Verizon, have invested heavily to acquire legacy media and online advertising companies in the hope of finding a viable business model to compete with more innovative offerings from a growing list of alternative providers.

Video Entertainment Market Development

Meanwhile, the growth of subscription over-the-top (OTT) video services has been driving the changing trends in the pay-TV landscape. OTT video services have attracted hundreds of millions of subscribers worldwide, causing pressure on traditional pay-TV operators.

This OTT growth trend is expected to continue, reaching a subscriber base of 400 million in 2018, according to the latest global market study by ABI Research.

OTT video services offer less expensive alternatives and no long-term contract features compared to existing pay-TV offerings that are driving an increasing number of pay-TV customers to switch to these OTT services.

In markets such as North America and Europe, traditional pay-TV operators have jumped into the OTT market to improve subscriber churn by providing less costly video service. DirecTV’s Now, Dish Network’s Sling TV, and Sky’s Now TV are among the operators which offer Virtual Multichannel Video Programming Distributor (vMVPD) services, linear channels via an internet connection.

"vMVPD services offer live TV packages as low as $10 and customized packages are attracting cost-sensitive customers," said Khin Sandi Lynn, Industry analyst at ABI Research.

Dish Network’s Sling has secured more than 2 million subscribers in the two years since it launched. Similarly, DirecTV Now has gained 1.2 million subscribers within one year of its launch, offsetting the subscriber loss of its satellite TV platform.

"Pay-TV operators recognize the consumer demand for vMVPD services and are trying to expand their OTT offering by providing more content choice to compete against other subscription OTT services such as Netflix," Lynn noted.

Despite the low cost of basic vMVPD packages, the availability of live sports packages and customization features contribute the higher ARPU compared to other subscription OTT services. Hulu and YouTube launched live streaming packages in 2017 creating more competition in the vMVPD market.

Outlook for Legacy Pay-TV Market Recovery

"As competition intensifies, content and quality of service are crucial to win the OTT war," concludes Lynn. ABI Research forecasts that OTT video services will put more pressure on traditional pay-TV services especially in the developed markets with high broadband and pay-TV penetration. The worldwide OTT video market is expected to grow at CAGR 10 percent to generate $51.4 billion in 2022.

That being said, the duopoly of legacy telecom service providers and cable-TV companies will continue their quest to reinvent their business. While it's unclear if a strategy to acquire legacy media and online advertising firms is the answer to their dilemma, the prospect of being able to compete successfully against Netflix, Hulu or YouTube seems bleak by comparison.

Popular posts from this blog

Wireless Solutions Advance Work from Home Trends

Despite a challenging backdrop from the ongoing effects of the global COVID-19 pandemic, the negative impact on fifth-generation (5G) wireless supply chains has been minimal compared to the wider mobile smartphone market. This led to 5G mobile devices becoming more diverse, brought to market quickly at a variety of price points, thereby accelerating affordability and adoption. The mobile market is transitioning to 5G and many leading vendors are now exploring the low-priced 5G smartphone segment. According to the latest worldwide market study by ABI Research, 681 million 5G handsets will be shipped in 2022. Therefore, the race is on for OEMs to find that all-important level of differentiation in their flagship portfolios to help boost margins and improve market share. 5G Wireless Market Development Vendors continue to drive the adoption of new product designs, screen technology, chipsets, and camera setups -- notably within the flagship smartphone segment. Meanwhile, the leaders seek a

Software-Defined Infrastructure: The Platform of Choice

As more organizations adapt to a hybrid working model for their distributed workforce, enterprise CIOs and CTOs are tasked with delivering new productivity-enabling applications, while also seeking ways to effectively reduce IT cost, complexity, and risk. Traditional IT hardware infrastructure is evolving to more software-based solutions. The worldwide software-defined infrastructure (SDI) combined software market reached $12.17 billion during 2020 -- that's an increase of 5 percent over 2019, according to the latest market study by International Data Corporation (IDC). The market grew faster than other core IT technologies. The three technology pillars within the SDI market are: software-defined compute (53 percent of market value), software-defined storage controller (36 percent), and software-defined networking (11 percent). "Software-defined infrastructure solutions have long been popular for companies looking to eliminate cost, complexity, and risk within their data cente

Digital Identity Verification Market to Reach $16.7B

As more enterprise organizations embrace the ongoing transition to digital business transformation, CIOs and CTOs are adopting new technologies that enable the secure identification of individuals within their key stakeholder communities. A "digital identity" is a unique representation of a person. It enables individuals to prove their physical identity during transactions. Moreover, a digital identity is a set of validated digital attributes and credentials for online interactions -- similar to a person's identity within the physical world. Individuals can use a 'digital ID' to be verified through an authorized digital channel. Usually issued or regulated by a national ID scheme, a digital identity serves to identify a unique person online or offline. Digital Identity Systems Market Development Complementary to more traditional forms of identification, digital identity verification systems can enhance the authenticity, security, confidentiality, and efficiency of