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Pay-TV Aims to Compete in the Over-the-Top Market

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New entrants in the OTT market

A key trend affecting pay-TV operators is the mounting subscriber losses in 2Q15. In this part of the series, we’ll look at the different ways pay-TV operators are looking to stem this subscriber loss by adding alternative revenue streams to their existing business models.

On July 12, 2015, Comcast (CMCSA) announced its new streaming OTT (over-the-top) service called Stream, priced at $15 per month. Stream will be available only to Xfinity Internet customers in Boston later this year.

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As the above chart indicates, a number of other pay-TV operators have entered the OTT market. Dish Network (DISH) is also offering an OTT streaming service called Sling TV, priced at $20 per month. Time Warner Cable (TWC) now has HBO priced at $15 per month, and CBS (CBS) offers an online streaming service called CBS All Access, which launched in October 2014.

However, pure-play OTT companies like Netflix (NFLX) still hold a price point edge over OTT offerings from other pay-TV operators.

Pay-TV operators need OTT services to attract Millennials

Online digital video viewing is increasingly popular among consumers 18–34 years old. These Millennial viewers, who are sometimes called “cord-cutters” or “cord-nevers,” have either stopped subscribing to pay-TV or have never subscribed.

Video online streaming companies like Netflix and Hulu have helped drive these viewers away from pay-TV. For this reason, pay-TV operators have had to enter the OTT market in order to attract non-pay-TV audiences and create alternative revenue streams.

You can gain a diversified exposure to Comcast by investing in PowerShares QQQ Trust, Series 1 ETF (QQQ), which holds 2.41% of the stock.

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