Netflix and Amazon impact on US pay TV challenged

US pay TV will not decline as rapidly in the face of competition from Netflix and Amazon as some are predicting, according to a report by Strategy Analytics.

According to Strategy Analytics’ Subscription Video and TV Forecast – North America report, OTT TV providers such as Netflix and Amazon will take less than a 20% market share of consumer spending in the subscription video sector by 2022.

The analysts predict that overall spending on subscription video and TV in the US will peak at US$130 billion in 2019, and will decline to US$125.7 billion by 2022. Annual revenue growth is predicted to fall to about 4.4% by that date.

However, established pay TV firms such as Comcast and AT&T, including both legacy pay TV services and new OTT-light offshoots such as DirecTV Now, will stillaccount for four fifths of revenues until beyond 2022.

According to Strategy Analytics, both established pay TV providers and new OTT TV services will need to address a range of questions about changing consumer perceptions, including how far different consumer segments will be prepared to pay for different content packages, how important will be the availability of specific content titles and what the impact of bundling TV service with services such as home shopping, mobile and broadband will have on the sector.

“There is a long way to go before the winners can be announced. The long-term transition to IP-delivered video will allow many players to benefit, but understanding consumer needs and how to meet them will be critical to any successful strategy,” said David Mercer, VP and principal analyst at Strategy Analytics.