It’s a new year with new promises and new ideas. This year, I’ve decided to share some of my thoughts about the market trends and Accedo with you all via this blog. While we will have many guest writers, both from the Accedo team and from our friends in the industry, I’ll be the recurring writer.
I spend plenty of my time thinking about the market trends. It’s pretty clear that the market is growing, but it’s equally clear that the growth is chaotic and unevenly spread. My thoughts are primarily around how the market is growing and what sets winners apart from losers. Naturally, my goal is that Accedo can help our customers become the winners in this exciting industry.
One of the main observations I have made over the past year is the change in consumer perception of video services. A couple of years ago I, along with many industry experts, assumed that the OTT services that were launched on the market would compete directly with the pay-TV offerings. At conferences and trade shows we had plenty of discussion about cord cutting and the demise of the traditional pay TV industry. This hasn’t really happened. While most pay TV operators aren’t really growing anymore, the rapid churn of subscribers hasn’t happened and the growth of OTT subscribers has largely taken place without cannibalization on pay TV subscriptions.
I think the reasons can be found in the changing consumer perception of these services.
• First of all, the early adopter market for TV services is price insensitive. There is a group of maybe 10-15% who simply love TV. If OTT services have content, which cannot be accessed in an easy way via the pay TV operator, they will start subscribing.
• Secondly, consumers are increasingly seeing “app-based services” in a different way from pay TV services. Just as consumers don’t see a problem having access to multiple TV channels, they equally don’t see a problem having multiple OTT services.
• Finally, the feeling that you’re not committed to a long-term investment, including minimum subscription time and installation of STBs, makes the purchase decision much easier. Quite naturally, OTT services will have much higher churn that pay TV services.
The conclusion I draw from this is that we will over time see most consumers having multiple OTT services, depending on personal interest. We’ll see “service zapping” to find something to watch, and the various OTT services will need to spend much more time in securing “usage loyalty” rather than only subscription loyalty. Over time I believe that we’ll see even further fragmentation with different tiers, targeting different consumer groups to maximize revenue and minimize churn. We will see a world of service fragmentation, where the war for the consumer will not only take place before they become subscribers, but on a day-to-day basis between competing services, which have the same consumer as a subscriber on the same devices.
As a consumer, I’m looking forward to even more availability of exciting video services, and as Accedo’s CEO, the opportunities to help our customers compete are endless.