On-demand services from pay-TV operators are becoming more robust each year with more free content and integration of over-the-top (OTT) services, according to Austin-based IMS Research, who projects that in 2011 72% of VOD requests via pay-TV platforms will be free transactions.
OTT content delivered via set-tops will account for a fair share of free transactions, as well as generating a forecast $48 million (€35 million) for pay-TV operators this year.
Anna Hunt, author of the study On-demand Services Business Models: Video, Games & Over-the-Top – 2011 edition, said in a statement, “OTT services are becoming one of the biggest threats to traditional pay-TV operators, and with devices such as smartphones and tablets proliferating the marketplace, consumers are quickly becoming accustomed to on-demand multimedia consumption. Offering a variety of on-demand services is now essential for digital TV operators that want to retain market leadership status.”
Common strategies of pay-TV operators include offering free on-demand content to subscribers of certain digital bundles and offering catch-up TV services via set-tops or online, and over the next couple of years, integrating OTT services into the set-top box for seamless multimedia delivery to subscribers. IMS Research forecasts that in 2016 OTT services delivered via pay-TV set-tops will generate $436 million in worldwide operator revenues.
In addition, direct-to-home service providers are deploying IP-enabled hybrid set-top boxes to allow for more on-demand content delivery. Hunt added, “In 2010, we estimate that 37 million IP-enabled hybrid set-tops shipped worldwide, with 42% of these being satellite boxes. This equipment is allowing satellite TV operators to stay competitive with cable TV and IP networks, which are better suited for 2-way interactive services such as VOD.”
IMS Research forecasts that the cable TV segment will account for the majority of on-demand service revenues over the next five years, although its share will decrease from an estimated 66% in 2010 to a forecast 53% in 2016, mainly due on-demand service uptake on the satellite TV platform.