LAS VEGAS—Cable operators looking to expand the reach of their content should consider partnering with wireless carriers to get their content onto mobile screens, according to an analyst that covers the pay-TV and over-the-top content space.
During a presentation on OTT content at the 2014 National Association of Broadcasters conference here, Patrick Lopez, CEO of Core Analysis, said if pay-TV providers want to monetize content, they need to work with mobile operators because advertisers are willing to spend money on mobile advertising. "If pay-TV providers want to monetize content, eyeballs are moving to mobile screens," Lopez said. "MSOs should speak to mobile operators to figure out how to get content on mobile devices in a way that operators can support it. There's a low barrier to entry."
Interestingly, Lopez also hinted that he has heard that one pay-TV provider is considering offering an operator-branded stick, similar to Google's Chromecast or Roku, that would allow a consumer to watch, for example, Comcast Xfinity programming using a Verizon FiOS broadband connection. "There could be destruction of the current model," he said.Lopez also said that while he believes OTT content is complementary to pay-TV, he thinks an MSO/mobile network operator partnership is a more natural fit than an MSO partnering with an OTT player or a mobile operator partnering with an OTT provider.
Lopez also noted that while OTT revenues are still extremely small compared to pay-TV revenues --2013 revenues from over-the-top content was $9.4 billion compared to pay-TV revenues which were $192 billion—OTT players have managed to capture significant market share by delivering content directly to the consumer. "The ecosystem for consuming video across a variety of devices and in different environments is conspiring for an OTT explosion," he said.
Despite Lopez's observations that OTT players may not be a natural fit for pay-TV providers, an AT&T executive recently hinted that the company could use its 10.4 million standalone U-verse broadband customers to negotiate better content deals or explore the OTT model. During a Deutsche Bank Media, Internet and Telecom Conference last month AT&T's (NYSE: T) CFO John Stephens said: "The advantage for us is that opportunity for over the top for the broadband connections we have may be so attractive it allows us to shift gears or take risks with regard to our traditional subscription model on our 5.4 million customers."