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7 April 2016

OTT revenue in US to surge, pay TV growth almost slowed to halt

OTT access revenues in the US are forecast to grow 31% in 2016 to $6.7 billion, up from $5.1 billion in 2015, according to research from The Battle for the North American Couch Potato report by Company & Markets and Convergence.

The report, now in its tenth year of publication, also estimates that cable, satellite, and telco TV access revenue in the US grew just 3% in 2015, totaling $105 billion, which is predicted to grow by a slight 1.9% by the end of 2016.

The forecast for OTT US revenue to hit $6.7 billion by the end of this year means the entire US market will have almost reached as much as Netflix’s total 2015 revenue of $6.78 billion. In the US, Netflix ended 2015 with nearly 45 million subscribers, and has forecast an additional 1.75 million sign ups in Q1 of this year. Netflix also crossed the 75-million-member milestone worldwide earlier this year.

Last year saw a decline of 1.13 million US pay TV subscribers, according to the report, and it forecasts this to decline in 2016 to a loss of 1.112 million. This is much closer to our own estimated figure of around 1.5 million, compared to figures from other research groups which have somehow put the figure at less than 400,000. It’s worth noting that AT&T alone lost some 960,000 pay TV subscribers in 2015.

It also reports that 24.6 million US households ended 2015 without a traditional cable or satellite TV subscription, an increase of 2.1 million from the previous year, and forecasts this to reach 26.7 million by the end of 2016. As for cord cutters, there were 1.27 million in 2014, 2.1 million in 2015, and an estimated 2.08 million in 2016 – but the report doesn’t specify how the cord cutting figures are different from pay TV subscriber losses.

Further findings show that online subscription services represented a huge 51% of the overall revenues for the US movie and TV rental market during 2015. This was followed by kiosk with 17%, store 6%, Netflix Mail 6%, and online transactional 5%. The report forecasts online subscription services to represent 59% of the market by 2016, kiosk to drop to 14%, VoD to drop to 12%, with store, Netflix Mail and online transactional all down to 5%.

Broadcast and cable network online TV advertising revenues represented 4.2% of the total TV advertising revenue in the US during 2015, at $3.2 billion – which is forecast to account for 4.4% by the end of this year.

The OTT figures from the report cover the offerings of Netflix, Hulu, Sling, CBS, HBO, Lifetime, Noggin, PlayStation, Seeso, Showtime, Starz, and Tribeca.