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OTT Services Projected to Overtake Traditional TV in Subscribers by Start of New Decade

OTT Services Projected to Overtake Traditional TV in Subscribers by Start of New Decade

The cord-cutting revolution in television has been well-chronicled. As more research continues to pour in, it’s becoming clearer to see a future dominated by over-the-top media services.

According to Convergence Research via AdWeek, the number of OTT subscribers is expected to surpass linear TV subscribers by 2020. The number of traditional TV subscribers in 2016 outnumbered OTT subscribers by approximately 30 million. However, that gap shrunk dramatically last year with OTT gaining more than 10 million new subscribers while linear television lost about four million.

Approximately 32.13 million American households (roughly 26 percent) did not have a traditional TV subscription in 2017. That was a four-percent increase year over year from 2016, when 27.56 million Americans were linear TV subscribers according to Convergence Research.

As a result, traditional media companies aren’t shying away from entering the fray of the OTT movement. Disney has plans of launching their own streaming subscription service next year. Due to their massive library of content and film, their service is expected to be a strong competitor in the existing OTT landscape.

US TV Ad Spending 2016-2021
Despite sinking subscription numbers, television is still expected to generate more revenue than OTT, even in the near future. Linear TV is projected to make over $100 billion annually over the next three years. Meanwhile, OTT services like Netflix, Hulu, YouTube TV and others are slowly, but surely gaining ground. By 2020, OTT revenue is expected to peak at $27.6 billion, which is more than three times the revenue it generated in 2016.

A likely reason for the revenue disparity between traditional and OTT television is advertising dollars. Most ad budgets are still going towards placements on traditional TV. Netflix, for example, generates majority of its revenue solely from subscriptions. However, that tide will likely change in the next several years as audiences for OTT services continue to rise.

The cord-cutting revolution is something that brands and advertisers must watch closely. And here’s why. Brahm Eiley, president of Convergence Research told AdWeek that advertisers “should be very concerned about OTT’s meteoric rise and the downturn in TV access subscriber eyeballs, especially since the largest providers of OTT do not, for the most part, offer advertising. Within a few years, OTT will be in more households than TV access.”

It’s safe to say that this revolution will be televised.

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