Whether it’s subscrip
tion-based or transactional streaming, OTT video satisfaction is significantly higher for U.S. viewers in comparison with traditional pay-TV offerings, according to J.D. Power. And that’s fueling the rising ¨cord-cutting¨ trend, according to the three latest J.D. Power U.S. ¨wireline¨ market studies released Sept. 29.
J.D. Power assessed residential customers’ satisfaction with TV, Internet and phone services across four geographical regions – East, South, North Central and West – in producing the three studies. Five factors were used: network performance and reliability; cost; billing; communication and customer service. A sixth – programming – was used in the TV study.
The TV results reveal that customers are much more satisfied with over-the-top (OTT) streaming subscription services, such as Netflix, as well as those that offer ¨skinny bundles,¨ such as Sling TV and PlayStation Vue, than they are with pay-TV services from cable, satellite and telco provders. The same goes for programming apps, such as HBO Go.
OTT Video Satisfaction
Overall, respondents rated the total experience with alternative video services at 7.92 on a 10-point scale as compared to 7.18 for traditional counterparts, J.D. Power highlights in a press release about the findings on OTT video satisfaction.
Cost plays a big role, J.D. Power found. Respondents rated the overall cost of service experience for OTT alternatives at 7.99 as compared to 6.42 for traditional pay-TV services.
Alternative services also had the edge on performance and reliability: 7.98 for alternative services vs. 7.82 for traditional pay-TV, as well as programming (7.87 vs. 7.76) and billing (8.04 vs. 7.54) experiences.
Personalized according to individual tastes, more convenient (offering time-shifted viewing, for example), cheaper, of higher quality and reliability, alternative video services are prompting increasing numbers of pay-TV subscribers to cut the cord, J.D. Power notes.
Nearly 2/3 (63%) of respondents said they had used an alternative video service in the previous year. That’s up from 58% in 2015. Furthermore, 73% who said they intend to cut the cord in the next year indicated they will switch to an alternative video service.
“This finding partly reflects age demographics since younger customers are more likely to use alternative video services than older customers, and younger customers are more satisfied with alternative TV service than older customers,” commented Kirk Parsons, J.D. Power senior director and technology, media & telecom practice leader.
Parsons added that “customers who have used an alternative video service in the previous year are much more likely than those who haven’t used one—14% vs. 4%—to cut the cord on TV in the next year.”
An Ongoing Trend
The results really shouldn’t be very surprising; numerous market research studies have been indicating as much for quite some time now.
Just over a year ago, Parks Associates forecast that OTT video service subscription revenues would continue to exhibit strong growth, rising from nearly $9 billion in 2014 to more than $19 billion in 2019. Nearly 6 in 10 (57 percent) of U.S. broadband households subscribed to an OTT video service, Parks highlighted.
The breadth and depth of J.D. Power’s new market data reinforces and provides a stark indication of the growing threat OTT video services present to traditional pay-TV providers, and the latter’s inability, or unwillingness, to systematically shed traditional services and platforms and move on to new ones.
A recently released study from Altman & Vilandrie concludes that skinny bundles may prove to be an effective means for traditional pay-TV providers to respond. By doing so, they risk cannibalizing their own subscriber bases, however.
The latest results of J.D. Power’s three market studies suggest that they can either risk cannibalizing their own subscriber bases or stand aside and watch alternative OTT providers eat their lunch.
