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The OTT MaelstromThe over-the-top (OTT) video service sector is a swirling maelstrom of user numbers and service providers, but Park Associates is keeping track of the prevailing currents. Parks Associates released new OTT data this week ahead of next's National Association of Broadcasters (NAB) Show in Las Vegas. Before diving into some of the more well-known OTT providers, here's an interesting stat from Parks. As of March, there were 101 OTT video services available in the US market. But only 5% of the US broadband households have subscriptions to one or more of the 98 options beyond the usual suspects of Netflix Inc. (Nasdaq: NFLX), Amazon.com Inc. (Nasdaq: AMZN) and Hulu LLC . The "other guys" include CBS All Access, Sling TV , HBO Now and Crunchyroll. Aside of the top-three, 3% of the broadband homes in the US cancelled a subscription to an OTT video service in the last 12 months. By contrast, Parks said that by the end of last year, approximately 20% of the broadband homes in the US had cancelled at least one OTT service, which was slightly up from the 18% that had done so in the second quarter of 2015. "Several factors contribute to OTT video service churn by consumers," said Brett Sappington, senior director of Research, Parks Associates. "In some instances, consumers are experimenting with new services, trying a service and cancelling before the trial period ends or within a few months. Popular shows or events, such as HBO's 'Game of Thrones' or WWE Network's 'Wrestlemania,' can be beneficial in terms of attracting users. However, there is a risk that consumers will unsubscribe once they've watched these popular items." Sappington said that ongoing perceived value was the biggest factor for reducing churn over the long run. OTT services need to continue to provide users with reasons to stay on as subscribers, otherwise they'll disconnect to save money. Last year 33 new OTT services made their debuts in the US market, according to Parks. Among all US broadband households, 64% of US broadband households subscribe to an OTT video service, up from 59% in 2015. "On a service by service basis, the smaller OTT video services have relatively high churn, particularly relative to Netflix and Amazon," Sappington said. "Reasons for cancellation vary by service, but there are some common trends. Cancellers of OTT services with linear features (such as Sling TV, CBS All Access, and PlayStation Vue) are more likely to subscribe with the intent to terminate the subscription after watching specific content. They are also more likely to be critical of a service's interface than those who cancel VOD-only OTT video services." On the cancellation front, 5% of the US households cancelled Netflix in 2015, which was up from 4% of households reporting in 2Q 2015 that they cancelled the service in the past 12 months. Netflix had the lowest churn rate as a percentage of its total subscriber base; the 5% that cancelled represented 9% of the company's current subscriber base. Netflix is planning on raising the price of its service from $7.99 to $9.99 next month for customers that were grandfathered in on the lower price -- new subs are charged the higher sum -- but it's unclear what the impact will be on its subscriber numbers. Netflix is still the overall OTT leader in the US with 52% of those households paying for the service at the end of last year. (In other Netflix news, the company has started using high dynamic range (HDR) streaming for at least one of its shows.) For Hulu, 14% of US broadband households subscribed to its service, while 7% cancelled the service in 2015, which was roughly the same churn rate from Q2 2015. For Amazon Prime Video, 24% reported having a subscription, and 5% said they had unsubscribed last year. Amazon's churn rate declined a bit from the second quarter of 2015 by the end of the year.
— Mike Robuck, editor, Telco Transformation |
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Orange has been one of the leading proponents of SDN and NFV. In this Telco Transformation radio show, Orange's John Isch provides some perspective on his company's NFV/SDN journey.
Special Huawei Video
Huawei Network Transformation Seminar The adoption of virtualization technology and cloud architectures by telecom network operators is now well underway but there is still a long way to go before the transition to an era of Network Functions Cloudification (NFC) is complete. |
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