State of Digital UK 2023
Over-the-top (OTT) adoption is on the rise, increasing 17 percent year-over-year. With such astounding growth, it isn’t a surprise that the industry is buzzing about OTT and how it is impacting other traditional channels. But more than anything, the rise of OTT has highlighted how these channels – linear TV and digital – are converging. Virtual MVPDs, in particular, are a prime example of viewers utilizing digital mediums to watch live content formerly only available on linear TV.
The Virtual MVPD Explained
One of the most common questions I received during Comscore’s recent “State of OTT” presentation was, “What is a virtual MVPD?” Let me take a moment to explain.
MVPD stands for multichannel video programming distributor (yes, it’s quite a mouthful). What that means, in layman’s terms, is a service that provides multiple television channels – a.k.a. a cable or satellite television service like Comcast, DirecTV, DISH, Cox, etc. These were often formerly known as “operators” or “MSOs.”
A virtual MVPD (vMVPD) is a service that provides multiple television channels through the internet without supplying its own data transport infrastructure (i.e. coaxial cable, fiber, or satellite technology). These services are also sometimes called “skinny bundles” as they often contain fewer channels than a traditional cable or satellite subscription. You may be familiar with some vMVPDs such as Sling TV, DirecTV Now, PlayStation Vue, Fubo, Philo, YouTube TV and Hulu Live.
Then there is what I call “pure-play” vMVPDs. These are the services that are exclusively vMVPDs, excluding services like YouTube and Hulu that have substantial non-linear, digital-only content such as user videos and original programming.
The Next Frontier of Linear Content is OTT
It’s not surprising in the age of the rapidly expanding video ecosystem that consumers expect to be able to watch whatever they want, whenever, wherever and however they want. Traditional linear TV has long been a mainstay for providing quality content that viewers love, and OTT provides a dynamic environment in which viewers can experience this content on their own terms. It just makes sense that the two worlds are colliding.
In fact, over the past year, we’ve seen concrete indicators that more and more users are gravitating toward linear TV on OTT via virtual MVPDs:
Live Content is Here to Stay on OTT
Given the competitive price points and low barriers to entry for consumers (no installation required), I anticipate that we will continue to see significant growth in virtual MVPDs in the years to come. Both Hulu and YouTube launched their services in 2017, so they are still in their infancy and have significant growth potential. In fact, it’s likely both services will well exceed one million users each this year. This would put vMVPDs at more than seven million users total – nearly one-third the number of households with satellite.
What does this all mean for traditional TV? The behavior of MVPDs in regard to digital is a prime example of the industry trying to stay ahead of the curve. Some traditional MVPDs have embraced digital with a virtual MVPD offering of their own (e.g. Dish has Sling TV, DirecTV has DirecTV Now). Many others are testing or have announced plans for a virtual MVPD offering indicating that they take this trend seriously.
Additionally, we've seen cable companies adding the ability to access Netflix, a digital service, on a cable box. It may be that future generations do not distinguish between a streaming box and a cable box at all – there will just be one place consumers go for their entertainment. Today, all the industry players want to position themselves to become that core entertainment source.
For networks, it’s important to understand that while their traditional linear audience is shifting, that doesn’t mean they have fewer viewers overall. Their viewers are just watching in different places and it’s important to measure this consumption across platforms/distribution channels – including vMVPDs – to get the complete picture of audience behavior.
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