A third of pay TV subscribers to use TV Everywhere by 2016

According to analysis by The Diffusion Group (TDG), more than 30 million US households will be using pay TV operator-provided “TV Everywhere” (TVE) services by 2016. That’s about a third of US TV households which subscribe to cable/satellite services.

"The logic is straightforward. If consumers can access their PayTV services on their PCs, pads, and mobile phones, they should be less likely to use competitive services like Netflix or Hulu and thus less likely to 'cut the cord’," notes Colin Dixon, TDG Senior Partner and author of the new report, “TV Everywhere Update, 2012.”

Will this strategy work? Perhaps, argues Dixon. "Though having 30 million households actively using TVE services by 2016 is not insignificant, by that same time OTT video services will be used by nearly 90 million US households. That's the reality that PayTV operators are facing."

In regards to TVE market dynamics, a few major content providers will choose to go it alone and sell direct-to-consumer (that is, without operator sanction), while some operators will attempt to extend existing carriage agreements to cover net-connected devices (that is, without content provider sanction). In most cases, the middle road will be most fertile, meaning content providers may be able to frame the end-user experience but operators will provide a branded, authenticated "gateway" through which consumers access the content. In other words, if a consumer does not subscribe to the content through a PayTV operator, TVE access will not permitted.

For these reasons, Dixon expects that Operator or "Op-TVE" services will dominate this market space. Though Content Provider or "Con-TVE" services will play a role in the early market, they will quickly be absorbed by Op-TVE services, according to the TDG analyst.

Dixon sees this multi-screen, multi-source paradigm gaining traction over the next few years, due primarily to a shift in viewing models, from a "... content-centric model -- where the viewer seeks to find the content -- to a viewer-centric model -- where the content seeks to find the viewer." In this quantum video universe, multiple sources appear on the TV screen and on-demand availability matters more than the source of content.