The Number of OTT-Only U.S. Homes Has Tripled Over the Last 5 Years

More consumers are cutting the cord, but VAB study says advertising is still essential to the ecosystem

Netflix households in the U.S. watch the streaming service an average of 12.3 days per month. Netflix
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Millions of U.S. households are cutting the cord and switching to over-the-top (OTT) devices, but the number is still less than one-sixth of all households with cable and satellite subscriptions, according to a new report from the Video Advertising Bureau.

The VAB report, which looks at OTT usage, found that the number of households using only over-the-top streaming services and devices has tripled since 2013, rising to 14.1 million homes (11 percent of all U.S. TV households). That’s still fewer than the 12 percent of U.S. households that receive broadcast network signals via antennae.

The OTT-only number represents less than one-sixth of the 90.3 million U.S. households (74 percent overall) that have a cable, telco or satellite subscription. And 70 percent of households with OTT capabilities also have a cable subscription, indicating that OTT offerings are still largely supplemental for most U.S. viewers.

In its report, the VAB defines OTT as premium long-form video content streamed over the internet through an app or device onto a TV, computer, tablet or smartphone without requiring a wired cable, telco or satellite TV subscription.

While the OTT-only percentage remains small, the use of OTT devices and access are most definitely on the rise. Nearly one-third of all OTT subscribers now have three or more ways of accessing their OTT content (for example, via a smartphone, tablet or connected TV device), which has increased eight times since just two years ago.

Currently, there are 820 million connected video devices in the U.S.: 30 percent of those are smartphones, 20 percent are smart TVs and 15 percent are computers or home media servers. The VAB said that 71 percent of internet users use an OTT service at least once a month.

The Video Advertising Bureau report, as expected, makes the case that advertising will continue to be an essential component of the OTT ecosystem. According to the findings, 65 percent of people who use a second screen while streaming content have looked up information about a product they’ve seen advertised or featured on that program.

Advertising currently comprises 45 percent of online video revenue and is projected to grow to almost 60 percent of online video revenue over the next decade.

Other noteworthy OTT findings from the report:

  • 50 percent of all internet users access an online video subscription service at least once a week; almost as many (49 percent) access a network TV app at least once a week.
  • Streaming accounts for 11 percent of all TV viewing hours in the 18–49 demo, up from just 5 percent in 2015.
  • Roku is responsible for the highest cumulative weekly time spent of any device for viewing OTT content, followed by Amazon Fire TV/Stick and PlayStation.
  • Consumers only regularly watch half of the subscription video services that they have access to; a trend is steady among traditional pay-TV subscribers, cord trimmer and cord cutters.
  • The four major OTT streaming services—Netflix, Hulu, YouTube and Amazon—average more than two hours of usage per viewing day per household (for example, Netflix has an average of 12.3 monthly viewing days per household and an average of 2.2 hours per viewing day). Meanwhile, ad-supported TV averages 7.9 hours of usage each day.
  • While Netflix is viewed more days each month per household than Hulu (12.3 days versus 9.9), viewers spend more time on average with Hulu (2.9 hours per household per viewing day) than Netflix (2.2 hours).
  • Netflix accounts for 40 percent of total OTT viewing, followed by YouTube (18 percent), Hulu (14 percent) and Amazon (7 percent). Other OTT offerings account for the remaining 21 percent of viewing.

The entire VAB report on OTT trends can be found here.

@jasonlynch Jason Lynch is TV Editor at Adweek, overseeing trends, technology, personalities and programming across broadcast, cable and streaming video.