That quote came from one of our colleagues, and it really was emblematic of the week in OTT. All the sacred cows (including James Dolan, to the disappointment of industry watchers everywhere) came under attack, as an ocean of data conspired to be as unhelpful as it could be.
Nothing was more striking than the claim that Millennials aren’t really inveterate cord-cutters. Ironically, the article then goes on to tell us that something in the range of 20% have cut the cord to cable, and only 50% are unlikely or somewhat unlikely to cut it in the future. Let’s get some perspective here: in a nation with near total saturation of Pay TV, even a 20% reduction in subscriptions is a sea change!
Perhaps, though, we need to take into account the time being spent watching. Wurl released an interesting study that suggested Pay TV is watched 13 times more (on a minute-to-minute basis) than Netflix…which itself is way longer than the other sources listed. In and of itself, fascinating. What we need next, though, is to total up the time spent watching Netflix plus the other real OTT TV offerings (HBO Now comes to mind) to come up with a real comparison. We know that TV still holds the crown, but the speed at which online viewing is catching up is truly breathtaking.
And for those keeping score at home, those OTT services need to keep growing: Ampere Analysis revealed their estimate that Hulu and Amazon alone will spend $9B per year on content in the next five years. While the growth of the online offerings is a threat to traditional players, the growth in cost suggests the playing field may be leveling. When you consider Netflix is (at the time of writing) running a forward P/E ratio of 333 on $400M of EBITDA, any growth in costs combined with any slowdown in customer acquisition could easily spell a correction. By way of context, Comcast is running a future P/E of 15 on EBITDA of over $24B. Momentum is clearly important to the upstart.
Speaking of growing content costs, live sports are back in the news. IPTV News reports that fully 40% of cord-cutters are lured back to subscription TV by live sports. Mediapost concurs, and points out that 88% of sports fans watch on television. Perhaps those escalating costs are more justifiable than the cynics thought.
Finally this week, a shout-out to all our colleagues here at Conviva for the big win at the Digiday Signal Awards – what an honor to be recognized. We have our fingers crossed for a two-fer, with the Content Innovation Awards coming up this week in Cannes. Oh, and if you have a moment and the inclination, do please vote for us for the Streaming Media Readers Choice Awards (BY MIDNIGHT 10/1)– you can win a GoPro Hero4 (courtesy of Streaming Media) just for voting!