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Following OTT and content licensing announcements at NAB and the Aereo, Inc. case before the Supreme Court, Parks Associates (www.parksassociates.com) says that pay-TV penetration remains fairly steady at around 85% of U.S. broadband households but over-the-top (OTT) video use is increasing on multiple devices, particularly with younger viewers.
"Pay-TV subscriptions remain high among Millennials, but at the same time, nearly 40% in this age group consider online video the most important source for video content," says Glenn Hower, research analyst, Parks Associates. "As consumers diversify their viewing resources, the licensing process becomes more complex. Additionally, the Supreme Court case in ABC v. Aereo could drastically reshape the licensing environment for retransmission. A win by Aereo may set legal precedent for a method to rebroadcast without compensation."
Parks Associates analysts note the cord-cutting threat hasn't materialized for pay-TV providers because consumers found the experience was too fragmented to get the content they want. This finding underscores the important role of content in retaining subscribers, according to the research group.
"From carriage fee battles between operators and networks to uncertainty in advertising dollars for multiscreen video, the market is experiencing growing pains," Hower said. "The new report provides Parks Associates' recommendations for entertainment companies, networks and broadcasters, pay-TV providers, and OTT providers.