OTT Providers Capture Increasing Share of Viewership

Recurly-OTT-Viewership-BlogImage.png“Binge-watching” is a new term that has joined the lexicon in the past few years. A runner-up for Oxford Dictionary’s Word of the Year in 2013 (the word “Selfie” was chosen instead), binge-watching refers to watching multiple episodes of a TV program in rapid succession. Netflix’s decision to launch all at once the entire first season of their original series, House of Cards, popularized the practice. Viewers in the thrall of the conniving and power-hungry Frank Underwood and his wife Claire wouldn’t have to wait a week for the next episode—and binge-watching officially became a “thing.”

Now ten years old, Netflix recently reported the largest jump in subscriber numbers ever in a single quarter—adding seven million new subscribers in the last quarter of 2016, both in the U.S. and internationally, bringing its total subscriber base to almost 94 million.  

Of course, Netflix did not begin as an OTT service. It’s genesis was Netflix founder Reed Hastings’ annoyance in having to pay a fee for returning DVDs late to the local Blockbuster, on top of having to drive to and from the store to rent and return them. As users’ preferences evolved—and access to high-speed internet improved—Netflix transitioned from mailing DVDs to providing the bulk of their library as a binge-friendly streaming service.

Other Over-the-Top (OTT) services are offshoots of traditional cable services—services like HBO Go, Showtime Now, and CBS All Access which seek to recapture audience share from cord-cutters who no longer maintain a cable TV subscription or who want a “watch anywhere” option for their cable shows. These services may not yet be able to boast the numbers that Netflix has for streaming subscribers, but they are catching up fast. While the two million domestic HBO Now subscribers are a mere sliver of HBO’s overall U.S. subscriber base of 49 million, it’s a growing portion. The company reported that new streaming subscriptions in 2016 were triple those of the previous year.  

But success in video streaming isn’t limited to US-centric movies and TV. Crunchyroll, the largest anime streaming service, reported recently that they’ve topped one million paying subscribers, out of a total of 20 million registered users. Crunchyroll operates under an ad-supported freemium model with both free and paid offerings, and the company is the top destination and platform for Japanese anime and Asian content, delivering more than 800 titles, 25,000 episodes and 15,000 hours of licensed content from Asian media producers, according to Subscription Insider. Dragon Ball Super has the distinction of being the most binge-watched show on the service last year.

Of note is that OTT businesses, unlike traditional cable channels, are potentially more profitable since they receive revenue directly from their subscribers rather than getting only a percentage from the cable company. As Motley Fool points out, pay-TV affiliates typically take around half of subscription revenue off the top, but of course, the cable companies also take care of delivering the product, billing, and customer service.

All indicators point to OTT as the increasingly dominant model of streamed entertainment, with revenue and subscriber numbers growing steadily. Recurly counts a number of the most-popular OTT streaming services as customers. To learn more about how our subscription management platform can support your subscription business, sign up for a demo below.

 

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