Don't Expect Mass Exit from Pay-TV to OTT Anytime Soon, TDG Analyst Says

The woes about pay-TV subscriber losses are overblown, since over-the-top (OTT) competition isn't providing a good alternative, TDG Research analyst Alan Wolk said in a blog post Thursday. "Unless you’re an infrequent TV viewer, the cord-free experience quite frankly sucks" and the growth of OTT services "seems to have exacerbated the problem rather than ameliorated it," Wolk said. Pay-TV market research firms have pointed out in recent days the declining numbers of multichannel video programming distributor customers reported in Q2 (see 1508200024). While the 13 largest MVPDs lost about 500,000 subscribers, the top nine -- which have close to 90 percent of the cable pay-TV customer base -- had about half the customer losses they had in Q2 2014, while Q2 2015 saw the smallest Q2 losses since 2008, Wolk said. Meanwhile, an OTT system that's as robust as a cable package isn't much cheaper, and adding on streaming services, kids-and-sports programming and a premium subscription service like HBO or Showtime results in a package that "may well be as expensive [as]the one you were getting from Comcast," Wolk said. An OTT-centric experience also is more cumbersome because "going from app to app may work on your phone, [but] it’s not a particularly expedient way to watch television," Wolk said. But he said "pay-TV’s current advantages may not last forever. While a cloud-based universal program guide for OTT may still just be a pipe dream, it’s not in the same league as flying cars" and a good customer experience with better features could be a selling point for an OTT system even if it has fewer channels, he said. While OTT resellers that bundle various services together could emerge, "We're not likely to see a massive exodus anytime soon" from pay-TV, Wolk said.