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OTT Went Big in 2016, Aims Higher in 2017

Mari Silbey
12/26/2016

In just two years, over-the-top TV has gone from niche endeavor to mainstream preoccupation. CBS launched its All Access service at the end of 2014, followed by Dish's unveiling of Sling TV at CES 2015 and HBO's announcement of HBO Now a few months later. Then came Showtime's streaming service, a national launch for Playstation Vue and much, much more.

This past year brought two major telecom companies into the fray. Verizon Communications Inc. (NYSE: VZ) entered its first full year with Go90 on the books (the mobile service officially launched in late 2015), and AT&T Inc. (NYSE: T) kicked off DirecTV Now. Meanwhile, several online stalwarts are promising new content offerings for 2017, including Facebook , Hulu LLC and YouTube Inc.

Here are some of the top highlights from 2016, along with a look ahead and even one genuine big-deal prediction for next year.

The good and bad for Sling TV
Sling TV has grown quite a bit since launch, adding to its channel line-up and expanding its bundle options. The good news is that Dish Network LLC (Nasdaq: DISH) has attracted more than 600,000 estimated subscribers to the Sling TV $20-per-month OTT service. The bad news is that Dish is losing pay-TV customers overall (116,000 in the third quarter), meaning that even with Sling TV gains, the satellite TV company is not only dropping subscribers, but also significantly eroding its average revenue per user. (See Dish Bleeds More Subs, Faces OTT Rival.)

Here's the conundrum. Sling TV offers one of the best content bundles for a price point well under the standard cable TV package. If it increases the price, it will be hard to sustain its growth. But if it doesn't increase the price, Dish may have a hard time reconciling the bottom line.

One potential way to attract new customers and new money is to introduce new features. Dish is currently beta-testing a cloud DVR service to go with Sling TV that could bring in additional revenue. It also appears to be on the verge of coordinating the launch of AirTV to combine the Sling TV service with over-the-air content and other OTT apps on an Android-powered device. If successful, the AirTV player could help boost Sling TV's subscriber growth. (See AirTV Promises Best of OTA & OTT.)

Where has Go90 gone?
Few video services have gotten as much attention before launch as Go90, but for all the marketing effort, Verizon so far has little to show on the subscriber front. Or more accurately, Verizon has nothing at all to show because it hasn't released any subscriber totals. The signs aren't positive, however. While Verizon keeps throwing money at the service, CEO Lowell McAdam has tried to walk back expectations, acknowledging that Go90 may have been "a little bit overhyped." (See Verizon Backpedals on Go90.)

That said, Verizon is still very much in building mode with Go90, acquiring and testing out content that it believes will resonate with younger audiences and continuing to invest in its advertising platforms. Importantly, Go90 is not meant to be a cable TV replacement. First of all, it's free. And second of all, the video library is tuned more in the direction of web-born video than traditional television.

One of the big things that Go90 has going for it is that any video streamed from the service is exempt from Verizon's mobile data usage caps. That's a big incentive for potential viewers because it means they don't have to worry about additional fees while using Go90. And the longer users spend with the service, the more ad revenue Verizon stands to gain.

The FCC had signaled it would take a closer look at this zero-rating practice to determine if it represents anti-competitive behavior. However, now that the FCC is shifting into Republican hands, the concern that regulators might block zero rating is almost certainly moot. (See AT&T & Trump Tangle Net Neutrality's Web.)

Next: DirecTV Now disappoints

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SusanNguyen
SusanNguyen
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kennethramirez
kennethramirez
9/20/2019 | 6:27:09 AM
Re: traction...
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alicetrimmer
alicetrimmer
9/7/2019 | 7:40:07 AM
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Few video services have gotten as much attention before launch as Go90, but for all the marketing effort, Verizon so far hotel cheap near me has little to show on the subscriber front. Or more accurately,
Michael K. Guzman
Michael K. Guzman
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HardingStephenson
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KBode
KBode
12/26/2016 | 11:21:58 AM
traction...
Glad to see the continued traction. We cut the cord in 2013 and haven't given so much as a single glance in the rear view mirror. 
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