Ooyala Sees OTT as Gateway to Broadcast’s Future

SANTA CLARA, CALIF.—The state of the broadcast industry rests on OTT, or at least that is what video platform provider Ooyala claims in its second annual “State of the Broadcast Industry” report. Over-the-Top services saw a raised profile in 2015 and are becoming a necessary component for broadcasters big and small, according to the report.

A key driving factors for OTT’s emergence is the fact that Millennials, as of 2015, are the largest segment of the U.S. population. Pew Research Center projected that Millennials, totaling more than 75 million, have over taken Baby Boomers. This has contributed in a shift of traditional TV viewing, as 45 percent of adult viewers no longer strictly adhere to the traditional TV schedule, instead using OTT, TV Everywhere, and other mobile services for a more individually-tailored experience. Ooyala reports that a quarter of Millennials without children do not have cable, which could result in future children of cord-cutting parents to become cord-never kids.

This is leading pay TV providers to offering OTT services. 2015 was the first year that pay TV providers suffered a net loss of subscribers during Q1, according to MoffettNathanson analyst Craig Moffett. A PwC survey reported that 79 percent of the U.S. population had some form of pay-TV service, but 78 percent also subscribe to at least one streaming VoD service. Ooyala forecasts that traditional linear channels will remain for the foreseeable future, but will become secondary compared options like broadcast OTT channels, operator OTT services, catch-up TV and multi-channel networks.

One advantage for pay TV providers in this growing OTT market is broadband. OTT gains are driving broadband home growth and helping to offset higher programming costs and video-revenue decline, according to Ooyala. Cable providers currently control 60 percent of the broadband market, reports Leichtman Research Group, and many expect them to continuing to expand their broadband presence.

Ooyala also addresses some of the new technology in broadcast, including smart TVs and connected TV video-streaming devices, and the emergence of virtual reality content. Other areas of interest for the report include programming and advertising.

To read Ooyala’s full “State of the Broadcast Industry” report, click here.