For years, analysts and prognosticators have been predicting that the world of TV was going to shift from "over-the-air" (OTA) to "over-the-top" (OTT). That is, people will go from primarily consuming their television through a cable box to consuming it through Internet streaming services — which may or may not be connected to an actual TV.
And although there is no doubt that viewers are increasingly consuming more and more content online, the big question has been, "Will the content creators actually make the jump to OTT services?"
We're just a quarter of a way into 2015 and we're already seeing signs that content providers are finally, finally willing to offer their services in real-time (as opposed to on demand, which has been around in various forms for a while) to users without the need for a separate cable TV subscription. The first indicator was Sling TV, Dish's new $20 a month bundle of OTT channels. This week, we saw the early launch of PlayStation Vue and new rumors of Apple's much-anticipated Internet TV service. And on April 12, HBO will officially launch HBO Now, it's $15-a-month subscription offering that will bring the network's programming to those who want to forego a traditional cable subscription.
HBO might be the biggest and most notable content company moving to the direct-to-consumer play, but they aren't alone. Last year, CBS launched its CBS Now digital subscription service. NBC is also working on an OTT comedy channel.
Several possible reasons:
1. It's not just that more and more consumers are opting out of a monthly cable package — the amount of traditional TV viewers are watching is dropping, too. Viewers — particularly millenials — are moving to subscription streaming video services in droves. A ComScore report in October 2014 showed that 24% of adults 18-24 don't pay for traditional TV service. Those are figures that should scare anyone in the content business.
2. The timing is right. According to NBC Universal's Alan Wurtzel, subscription video viewing was up 22% year over year in 2014. Nielsen's latest total audience report shows 40% of U.S. households subscribe to at least one video streaming service as of November 2014. Verizon started offering Netflix with its service last year in some test markets. And Cablevision will be offering HBO Now to its broadband providers, no TV service needed.
3. Evolve or die. The plethora of content opportunities means that it's harder than ever for content creators to amass huge viewing audiences (outside of major sporting events such as the Super Bowl and World Cup). The number of people tuning into live primetime TV for a hit show is far lower than the numbers from even a decade ago, and that's only going to continue.
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