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Cable and OTT: Friends With Benefits?

8/29/2016 8:00 AM Eastern

Today’s consumers have more options than ever when it comes to content viewing. The rise of streaming services such as Netflix and Hulu has ushered in new digital era where consumers can have instant, on-the-go access to their favorite shows.

 

As the popularity of these a la carte viewing options has increased, many have speculated about the future of the traditional cable bundle. Buzz-worthy headlines about the rise of “cord-cutters” are seen as an indication of the cable industry’s demise.

 

While this might be the story that is often portrayed, service providers still maintain strong dominance among consumers — 83% of U.S. households still subscribe to a traditional pay TV service. At the same time, streaming services are increasingly coming up short when it comes to engaging new audiences as exemplified by Netflix, which last month reported its weakest subscriber expansion in three years.

 

Streaming services historically served as the answer for consumers tired of the traditional cable bundle model, paying for countless channels they never watch. As the number of over-the-top offerings dramatically grows, though, many TV viewers are overwhelmed by the “pick and-choose” model.

 

Because of consumer frustration with the various content sources provided by the a la carte model, and the rise of new curated content from the OTT vendors, traditional service providers have been experimenting with skinny bundles and other customized offerings that cater to consumers, tying together these once-disparate ecosystems.

 

As streaming services look for ways to push past the realities of their current subscriber plateau, and cable companies focus on innovation and the content delivery experience, these unlikely partners need to work together to deliver content to consumers in an aggregated fashion — a task neither could accomplish without the other.

 

As we see in Comcast’s move to integrate Netflix into its X1 platform, pay TV and OTT are beginning to recognize the benefits each platform can bring to each other. It’s a growing trend: 20% of U.S. pay TV providers now offer subscription VOD services in their content bundle, per SNL Kagan. Streaming services get the ability to tap into a service provider’s reach, scale and distribution; traditional providers get the opportunity to provide consumers with access to desirable content to help retain subscribers and fight the cord-cutting mentality.

 

By coming together, traditional service providers and OTT providers can simplify their consumer offerings and remove annoyances such as the need for multiple remotes, various connections to the TV and separate subscriptions (and bills).

 

Ultimately, the benefits of these partnerships translates to more consumer choice, ease of access to new content, and a one-stop-shop for viewers to enjoy their desired content on their preferred device.

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