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Talk of Cord Cutting Premature

The Diffusion Group (TDG) announced it forecasts that half of the 488 million households capable of using Over-the-Top (OTT) video services in 2016 will actively do so.

For more information visit: www.tdgresearch.com


Unedited press release follows:

Internet Features Are the Norm for New TV Devices

New TDG Research Forecasts Explosive Growth in Net-to-TV Connectivity

FRISCO, TX–(Jun 2, 2011) – According to The Diffusion Group (TDG), the number of households that will be using over-the-top (OTT) video services will grow from 106 million in 2010 to 250 million in 2016. While impressive, this is but 51% of the households that will be capable of receiving OTT TV services in 2016. In other words, 488 million households will have the hardware and broadband services in place to receive OTT video services, only a portion of which will actively take advantage of these connections.

It is this gap between OTT-capable and OTT-active households on which TDG has concentrated its energy. Unfortunately, industry conversation has been derailed by a premature focus on so-called “cord cutting,” when in reality the opportunity/threat lies in chipping away at PayTV’s “premium” offerings like HBO. According to TDG Senior Partner Colin Dixon, this is precisely where net-connected TV platforms are having the most impact, pushing over-the-top video services like Netflix into mainstream living rooms.

“In 2009, net-based TV video services were few and far between. Today, when a consumer connects a ‘smart’ TV, a Blu-ray player, or any other video platform to the Internet, they will find a wealth of TV-optimized content and applications at their disposal.”

Among the various OTT platforms Dixon analyzes in TDG’s new report, he predicts that game consoles will continue their dominance at least for the next several years. Net-ready “smart” TVs will move swiftly into the market place, as will net-connected Blu-ray players, Internet set-top boxes, and hybrid boxes that blend PayTV functionality with Internet video services and applications, in many cases bringing IP functionality to live TV.

TDG’s latest report, OTT TV Platforms 2011, identifies six drivers that will spur OTT TV platform diffusion:

• Traditional consumer electronics replacement cycles will lead to replacement of legacy devices with net-ready models.

• Wider access to digital content across a variety of connected devices as operators relax their content distribution restrictions.

• Policies affecting the distribution of Internet video content will be decided by national governments and will impact the adoption of devices that enable OTT delivery.

• Consumers are growing accustomed to on-demand media delivery, and products and services that support on-demand access will be favored.

• All forms of personal media are now digitized, and consumers increasingly want to access this digital media on their televisions — be it video, music, or photographs.

• OTT services are now being offered on multiple screens, allowing a consumer to enjoy media not only on their PCs, but mobile devices and televisions as well.

TDG’s new report, OTT TV Platforms 2011, offers new insight on the future of OTT-capable TV devices, as well as their use in OTT-capable households. To purchase TDG’s new report, or to obtain more information about the analysis, please visit TDG’s website at www.tdgresearch.com or contact sales@tdgresearch.com.

About The Diffusion Group
TDG provides actionable intelligence on the quantum shifts impacting consumer technology and media behaviors. Since 2004, our market research and advisory services have helped hundreds of technology vendors, media companies, and service providers understand how consumers access, navigate, distribute, and consume broadband media — whenever and wherever they may be.

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