25 April 2019
There’s been a lot of talk about television viewers cancelling cable and switching over to subscription services like Netflix, Amazon Prime or Hulu, otherwise known as Over The Top (OTT). We see headlines like “Cord-Cutting Accelerates as OTT Video Keeps Growing” and “The Number of OTT-Only U.S. Homes Has Tripled Over the Last 5 Years.” But so far, the numbers don’t seem to reflect the giant migration advertisers had feared. While the headlines do reflect facts, they don’t provide much in the way of context. According to a 2018 report from the Video Advertising Bureau, the number of households exclusively using OTT streaming services and devices has tripled since 2013. But that adds up to only a small fraction of the U.S. market—anywhere from 11 to 13%, depending on which survey you look at. In fact, about the same number of U.S. households still use antennae to watch broadcast television—and nobody’s panicking about the rabbit ears taking over. The main OTT services—Netflix, Hulu, YouTube and Amazon Prime—account for more than two hours of daily viewing per household per day, on average. Ad-supported television, meanwhile, averages 7.9 hours of usage each day. And most people who use OTT devices and apps—about 70%— also have cable. Some aspects of OTT subscription make estimating viewership a little fuzzy. Nobody’s quite sure what the effect will be of forthcoming OTT platforms like Disney, Warner, Apple and NBCU; we can assume that OTT viewership will increase, but there’s some question as to whether we’ll reach a saturation point at which viewers resist subscribing to yet more services. Further, it’s likely that we underestimate OTT viewership, since sharing passwords is so ubiquitous. And finally, since subscription information comes from the services themselves, critics like FX Network CEO John Landgraf accuse OTT services of “grading their own homework”—i.e., potentially spinning the facts to benefit themselves. While OTT subscriptions are growing by leaps and bounds, it’s not time to abandon traditional advertising just yet. A wise marketer will determine the balance of media advertising allocations based on the demographics they wish to reach—and keep all advertising options on the table.