x
OTT

Hulu Is Greatest Threat to Pay-TV Providers – Study

Despite having a considerably larger subscriber base and a global footprint and recognized brand, Netflix is not the company driving cord-cutting among US pay-TV subscribers. Instead, it's Hulu LLC subscribers that are more likely to end their pay-TV subscriptions according to a report on CNBC from researcher M Science .

The study found that Netflix Inc. (Nasdaq: NFLX) subscribers were cutting the cord, but not at a substantially higher rate than non-OTT subscribers. But Hulu subscribers demonstrated a considerably higher tendency to churn out of pay-TV.

The primary reason for that is the type of content both services offer. Netflix does have a substantial library of TV programs in the US, but it tends to license content in a later release window. As such, many of those episodes have been broadcast well before they appear on the online service. However, Hulu is owned by the Disney-ABC Television Group, NBCUniversal, Fox Entertainment Group and the Turner Broadcasting System. It live streams TV shows from more than 50 channels including the major broadcast networks. It is the classic skinny bundle -- far more likely to appeal to viewers interested in a lower-priced package of channels.

But that's not necessarily all bad news for pay-TV providers. It suggests that there is a difference in the demand for OTT services and skinny bundles. This means that an operator could also have success in selling skinny bundles of their own, and several operators such as AT&T Inc. (NYSE: T) and Dish Network LLC (Nasdaq: DISH) have already launched them. Hulu's brand would almost certainly rate higher than most operators, but operators already have an existing relationship with the vast majority of the US subscriber base, and can package their skinny bundle with broadband -- and we know from past performance that bundling is attractive to viewers.

Revenue from a skinny bundle is less than a full-fat package, but, as some operators have pointed out, just because you start at a low price doesn't mean everyone will stay there. Operators have the opportunity to create attractive packages at different tiers and price-points, and move their customers towards higher monthly spends. And they won't have to pay carriage fees for a broader set of channels, as they do for a full-fat service today.

Conversely, the success of OTT streaming services isn't necessarily a death knell for pay-TV providers. If services such as Netflix and Amazon are not directly competitive (if not exactly complementary) they have an opportunity to work with these OTT services, integrate them into their line-up and potentially share revenue with them.

Speaking at this year's Mobile World Congress, Netflix CEO Reed Hastings went to great lengths to position his company as "just one more provider of content," and therefore no threat to service providers. (See We'll Make Buffering Obsolete, Like Dial-Up: Netflix CEO.)

He insisted that Netflix has always been about content, not distribution. "We've always wanted to create excellent programming, and distribute it worldwide, all at the same time," he said. This study would suggest that there is at least some truth to that.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation

<<   <   Page 2 / 2
Michelle 6/30/2017 | 11:48:13 PM
Re: Comcast Comcast isn't available in my area so I was wondering what the costs might be. It feels better to pay for channels you actually watch.
Michelle 7/4/2017 | 5:30:02 PM
Re: What happens after cord cutting? Ha! There's always something to do instead of watching TV (maybe not enjoyable tasks, but always something).
Joe Stanganelli 7/5/2017 | 9:37:00 PM
Re: What happens after cord cutting? @KBode: Considering I stopped using Hulu well before then -- nope.

Nor would they have anyway. There are relatively few events indeed I'm interested in re: livestreaming.
kq4ym 7/11/2017 | 2:12:15 PM
Re: What happens after cord cutting? I had only used Hulu when they had a free option and it was fairly conventient to watch some of the current but week old or so TV shows and some other entertainment options. When they switched to a paid version I lost interest. I still can get over the air TV free and lots of hundreds of options free through the internet or a Roku box and that seems to be a great solution if you want to spend nothing except internet service monthly fees.
<<   <   Page 2 / 2
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE