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Broadcast OTT Services Start Scaling

In another sign that the pay-TV landscape is fundamentally changing, three of the original streaming video services from old-style US broadcasters have gone mass-market with well over 1 million subscribers. Now the big question is: How high can they go?

Over the past week, the parent companies of HBO Now, CBS All Access and Showtime have revealed updated customer numbers for the three streaming services, which were among the first OTT services from traditional broadcasters to launch, in late 2014 and early 2015. And the figures show that all three services are growing apace as consumers continue to embrace streaming video channels over broadband connections. (See OTT Went Big in 2016, Aims Higher in 2017.)

Home Box Office Inc. (HBO) is leading the pack with 2 million subs for HBO Now. Time Warner Inc. (NYSE: TWX) CEO Jeff Bewkes confirmed in the company's fourth-quarter earnings call last week that the direct-to-consumer service hit that milestone in the US while also expanding its reach abroad last year. "We're also really pleased with the growth of HBO's domestic OTT product, and we expanded HBO's international OTT footprint with launches in Spain, Brazil and Argentina," Bewkes said in a statement.

Meanwhile, CBS Corp. (NYSE: CBS)'s two main streaming video services, CBS All Access and Showtime's OTT outlet, are not all that far behind HBO Now. As first reported by Variety, the Showtime streaming service has cleared 1.5 million subscribers while CBS All Access is closing in on the same mark.

CBS officials are counting on both services to get a strong boost this spring and summer as All Access introduces a new Star Trek series, which it will carry exclusively, and Showtime introduces its revival of Twin Peaks. They are also considering packaging the two services together at a slight discount to spike sales. Last July CBS CEO Les Moonves set a goal of the two services signing up a combined 8 million subscribers and generating $800 million in revenue by 2020.


Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.


The streaming video advances by leading TV programmers come as leading pay-TV service providers are increasingly scrambling to keep up by jumping into the OTT space as well. To cite several recent examples, AT&T Inc. (NYSE: T) debuted DirecTV Now late last year, CenturyLink Inc. (NYSE: CTL) is now trialing an OTT bundle that it plans to launch in the spring and Comcast Corp. (Nasdaq: CMCSA, CMCSK) is moving ever closer to offering a full-fledged OTT service with its new Xfinity Stream app. (See CenturyLink Embraces OTT Video and Comcast Teases X1 With Xfinity Stream.)

At the same time, OTT video churn rates, which have been high, are now showing signs of flattening out after climbing for years. In a recent study by Parks Associates , annual OTT video churn held steady in the US at 19% last year even as consumers continued to increase their spending on streaming video. In fact, the three leading OTT providers -- Netflix Inc. (Nasdaq: NFLX), Hulu LLC and Amazon.com Inc. (Nasdaq: AMZN) -- all managed to lower their churn rates in 2016, Parks said.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

Carol Wilson 2/16/2017 | 1:19:07 PM
Programming strategies Part of CBS's strategy seems to be to lure audiences with sequels of popular programs - the Good Fight following the Good Wife, and the StarTrek stuff as well. As Adi Kishore points out on our sister site here: http://www.telcotransformation.com/author.asp?section_id=444&doc_id=730365, Discovery Channel is succeeding offering niche content. 

It's like OTT is becoming what interactive TV promised to be decades ago - a place where everyone can find something they like. 
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