Saturday, August 18, 2018

Live TV is the Next Big Growth Opportunity for Streaming Video

“Live TV” is the new focus for over-the-top streaming video, one might well argue. The reason is that the non-linear, on-demand services (Netflix, Prime, Hulu and others) have begun reaching saturation. What is left largely unfulfilled are “live video” streaming services that mostly represent OTT “skinny bundles” featuring real-time TV programming that are very-direct replacements for linear subscription TV (cable TV, telco or satellite-delivered subscriptions).

Though almost no consumers will ever call them by their bureaucratic name, such virtual “multichannel video programming distributors” (virtual MVPDs) are the new growth opportunity in the consumer video streaming area.

In April 2018, just five percent (4.9 million) of U.S. households streamed content from vMVPDs on their television screens (as opposed to their mobiles, tablets or PCs, perhaps?). That is a 58 percent increase in households from the year before, according to comScore.

Consider the number of subscribers to OTT real-time TV services, compared to subscriptions for Netflix, Amazon Prime and Hulu, for example. In the first quarter of 2018, Netflix had some 54 million U.S. subscribers. Prime Video subs are north of 26 million. Hulu has something more than 20 million accounts, and might be considered a live streaming service as well (though that is not how some of use it).

But the next big wave of growth will come from “live TV” services such as DirecTV Now, which essentially are substitutes for traditional cable TV, telco TV or satellite TV services, but delivered over the top, using the internet.

DirecTV Now, by way of comparison, might hit about 2.8 million accounts by the end of 2018. U.S. live TV streaming services that replace linear subscription TV will hit a combined 9.2 million U.S. subscribers by the end of 2018 and 24 million by the end of 2022, according to analyst John Hodulik.

DirecTV Now, Hulu with Live TV and YouTube TV are projected to be the big gainers over the next five years, Hodulik believes. In large part, that is because traditional linear TV subscriptions still number more than  91.3 million accounts.

So substitute products for traditional subscription TV arguably represent a bigger unfulfilled segment of the business.

But we are going to need less-clumsy nomenclature, to distinguish between OTT “live” TV and on-demand services, as they are different products, fulfilling different needs.

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