Revenue, Users or Subscriptions: What Matters for OTT Video?
Some say Netflix now has more U.S. subscribers than U.S. cable TV providers. That is true. But the claim has to be put into context.
There now are about 93.3 million U.S. linear video accounts in service, according to Leichtman Research. Of course, the cable TV segment does have 48.6 million accounts, as Statista notes.
But the linear video category includes both satellite and telco suppliers. So some might argue the appropriate comparison is Netflix or OTT video versus “all linear video subscription” providers.
Looked at that way, Netflix still has some ways to go before it can be said to represent more accounts than linear TV, as Netflix has about half the number of total linear video accounts.
Of course, Netflix is not the only U.S. over the top video provider. Add up paid subscriptions from Amazon Prime, Hulu, Sling and others and you can make an argument there are as many OTT video subscriptions as linear subscriptions.
For purposes of measuring financial results, accounts--not “users”--are what matters, even if OTT providers or analysts sometimes measure users rather than accounts. The reason is that accounts directly produce revenue.
In some key respects, though, revenue--not users or accounts--remains a key metric. Linear video monthly average revenue per account is close to $100, while OTT service ARPU is closer to $10 a month.
U.S. linear subscription revenue grew was about $107.3 billion ($91 per month.
U.S. OTT access revenue (based on 47 OTT providers and led by Netflix) was about $8.3 billion in 2016, says Convergence Research Group.
One has to be careful about comparing apples and oranges as though they were the “same thing.”