Service Providers Must Embrace, Adapt to Online Content Delivery, Analysts Say
The number of people who watch broadcast TV programming on the Internet has doubled in the last year, said a recent survey conducted by Altman Vilandrie & Co. “More people are cutting the cord than ever,” said Jonathan Hurd, the firm’s research director and one of several analysts speaking at USTelecom’s Broadband Research Summit.
"At this point people still prefer to watch content on their TVs rather than their computers, but the gap is narrowing,” said Hurd. His company’s 2010 survey concluded that a larger percentage of people aged 18-35 are dropping their cable subscriptions in favor of other forms of media content distribution. “We think people won’t age their way out of cord cutting propensity,” said Hurd. Hurd theorized that the migration among younger consumers to watch media on their PC’s may occur because many of them don’t own televisions.
Other analysts attributed the migration away from traditional cable and satellite services to increased competition from content providers like Netflix, interconnected game systems such as the Xbox 360 and PS3 and Web-connected tablets such as the iPad. “The integration of cloud based providers into more and more devices will have a tremendous impact on the VOD space for cable and satellite providers,” said Yankee Group analyst Vince Vittore. The impact will be felt more acutely as Netflix increases the amount of content that it streams to consumers in the future, he said.
Nevertheless people are still willing to pay for video services and home televisions will continue to be the most important screen in the home, despite the rising trend of people watching on their PCs, said Vittore. In order to maintain and increase profitability, service providers will need to adapt and increase the amount of interconnectivity that consumers desire from their home television screens.
Game consoles have become a major player in the evolution of the current TV environment, said analysts from the Yankee Group. “People who are using gaming consoles to access the Net are increasingly cutting the cord,” said Dmitriy Molchanov, a Yankee Group analyst. “They are ubiquitous, connected and more often than not they are used for more than just gaming.”
Game consoles will pose a bigger threat to traditional service providers as successive generations of consoles become more interconnected to the Web, said Molchanov. However, service providers still have an advantage in that game consoles are currently limited by the number of devices and TVs they can connect to. As a result providers should increasingly seek to leverage the three-screen technology, said Molchanov.
All the talk of cord cutting consumers isn’t necessarily doom and gloom for service providers, said Stuart Sikes, president of Parks Associates: “This is a call to action. Consumers want a single interface to access content.” Sikes’ firm has done research in to monetizing the evolving technologies in the new media landscape and believes service providers can better capitalize on the interconnectivity of the Web. Sikes suggests that service providers embrace revenue platforms such as interactive program guide advertising because consumers think of it as the least offensive way to receive advertisements. “Interactive advertising is on a fast growth path in the online video advertising ecosystem,” said Sikes.