The market for broadband video services delivered ‘over-the-top’ of the open internet is driven by distinct consumer segments with different needs, not just ‘cord cutters’ keen to cut their television subscription costs. That is a conclusion of a new report from our research partners at The Diffusion Group.

“While over-the-top video delivery is widely discussed, it remains poorly understood,” explained Michael Greeson, the author of the report. He says that it is a mistake to confuse the concept of cord-cutting, or cancelling a pay-television subscription and watching only web-based video, with the more general concept of delivering video directly to the television over a broadband connection.

“The long-term prospects for OTT video delivery are solid and have little to do with the current trend of cord cutting,” he said. “In fact, the most immediate opportunity for OTT providers is as a supplement to existing PayTV services, not as replacement for them.”

This is based on primary research with a sample of more than 2,000 adult broadband users. They were asked whether they would sign up to a broadband television service either as a supplement to or as a replacement for their current pay-television service.

Four distinct market segments for over-the-top video are identified: replacers, supplementers, those who seem to be interested in both replacing and supplementing their current pay-television service, and those that a not currently interested in either replacing or supplementing their current pay-television service.

Only around a fifth of those surveyed were defined as replacers, inclined to replace, rather than supplement, their current pay-television service. Around a third of respondents expressed no interest in such services. The remainder, approaching half of those sampled, expressed an equal interest supplementing or replacing their current service.

Significantly, those that expressed an interest in replacing their current service do not appear to be either early adopters of technology or simply online video enthusiasts that dislike the idea of paying for television programming. They seem to be mainstream consumers, simply looking for a less expensive but more personalised television experience that offers better value, with the programming and features that they want.

The full report, entitled OTT Broadband Enthusiasts — Who are they, what drives, and what do they want?, is available from The Diffusion Group.