Pay-TV providers have made great improvements to their video platforms and services, but they are increasingly feeling the competitive heat and being pressured “from all angles,” a new Digitalsmiths’ market research report highlights. Surveying over 3,000 consumers in the U.S. and Canada for its Q4 2014 Video Trends Report, Digitalsmiths’ latest market research covers key developments and conditions in the Pay-TV, VOD (Video On Demand), and OTT (Over-the-Top) markets, along with connected devices and digital discovery.
Pay TV Subscribers Plan to Cut Service
According to Digitalsmith’s latest survey, 8.9 percent of respondents switched pay-TV providers during the previous months., a 2.1 percent increase from 4Q 2013. Looking ahead, 4.2 percent said they intend to “cut” ties to their current pay-TV provider.
Nearly 8 percent (7.9 percent) said they plan to change services, while 2.6 percent said they intend to switch to an online app or rental service. “While some of these numbers seem minimal, they should still raise concern for Pay-TV providers,” the report authors comment, “since multiplied by millions of subscribers, the revenue threat alone is apparent.”
Turning to cost, Digitalsmiths found that 24 percent of survey respondents are paying $151 or more per month for their Pay-TV services. That’s up 2.1 percent quarterly, 3.3 percent year-over-year and “represents the largest group of respondents,” Digitalsmiths notes.
Other key takeaways from Digitalsmith’s latest report on video trends include:
- Viewing Habits – Consumers are still not leveraging the extensive number of channels they have access to since the majority (85.1%) watched the same channels repeatedly, and 31.6% are overwhelmed by the number of channels. If improvements aren’t made, pay-TV providers risk increased churn due to the high cost for cable/satellite services compared to the number of channels watched;
- TV Everywhere – While the report shows impressive q/q and y/y increases in awareness, adoption, and usage of their pay-TV provider’s TV Everywhere app, there is still a large audience not using these offerings. Only 25.2% of respondents have downloaded their pay-TV provider’s app, and 52.1% of those use it less than once a week;
- Pay-TV Providers’ VOD and OTT – There were positive outcomes for pay-TV providers: the number of households renting one or more paid VOD per month rose 3.1% q/q and 3.4% y/y, and almost half (48.8%) of the respondents felt it was easier to navigate their VOD catalogs. However, there is still an uphill battle since OTT subscription services (Netflix, Hulu, etc.) grew at a faster pace at 8.0% y/y. So the efforts Pay-TV providers have made to improve the experience is helping, but the “cord-cheating” threat is very apparent and thriving;
- Content Discovery – In the last year personalized video recommendations has been a hot topic, and most video service providers are implementing video discovery features. But, is it improving the experience? The answer is yes. Respondents with recommendations are clearly finding it easier to find content at a more rapid pace than those without recommendations.