Pay TV operators must embrace OTT video by rolling out updated set-top boxes as the market slows down, according to new research.

The Pay TV market has been struggling with increasing customer churn and maintaining ARPU, and is forecast for only 3.7 percent CAGR through 2020, ABI Research said.

In contrast, OTT video should see around 26 percent total revenue growth this year, with 24 percent CAGR through 2019.

The research firm said customers are starting to demand a similar experience from their Pay TV subscriptions as they get from OTT services, such as Netflix and HBO Go.

[Read more: Netflix promises more telco deals as global expansion continues]

It cited features such as content search, recommendations and mobile device support in particular.

As such, Pay TV operators need to deploy IP-capable hardware to deliver such services.

Last month, France’s Free unveiled a new triple-play offer featuring a 4K-ready STB that runs Android TV.

ABI warned operators that are “passive” in embracing OTT face the challenge of maintaining subscriber counts even within their dedicated and satisfied customer base, while contending with other subscribers leaving in favour of more “progressive” options.

Analyst Eric Abbruzzese said: “Comparatively high priced pay TV bundles are losing customers to more inexpensive, IP-delivered content.

“Operators that are first to market with new set-top box technologies can expect strong returns—as much as 10 percent higher ARPU than with legacy technology—while those introducing the technology later will struggle to see similar success.

“Pay TV will continue to hold market majority going forward [but] the best chance for positive growth in the pay TV space lies in the implementation of OTT capability in both standalone and IP-enabled STB capacities.”​

More News

Iliad enters content game in France, finally launches Italian mobile business Iliad enters content game in France, finally launches Italian mobile business Iliad has acquired football rights in France and launched its opco in Italy as it looks to reboot after a disappointing set of financial results. More detail
Three UK appoints new CCO, CFO Three UK appoints new CCO, CFO The departure of Three UK's Chief Commercial Officer after just 18 months in the job has triggered a shake-up of the mobile operator's top team. More detail
TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk has agreed to sell 80,000 business customers to rival Daisy Group in a £175 million deal. More detail
A1 Telekom Austria Group rebrand reaches Bulgaria A1 Telekom Austria Group rebrand reaches Bulgaria Bulgaria is the third A1 Telekom Austria Group opco to get rebranded as the telco looks to market itself as a provider of "advanced" IT, IoT, cloud and content services. More detail
Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services has expanded its work with Dobroflot by developing a customised IoT solution for the Russian fishing company. More detail
    

 

European Communications is now
Mobile Europe and European Communications

  

From June 2018, European Communications magazine 
has merged with its sister title Mobile Europe, into 
Mobile Europe and European Communications.

No more new content is being published on this site - 

for the latest news and features, please go to:
www.mobileeurope.co.uk 

 

@eurocomms