cord-cuttingRelying on the strength of their content to attract and retain subscribers is no longer an option for pay-TV service providers. In an increasingly competitive market, they have to “raise their customer relationship management game,” according to new research about the pay-TV customer experience from subscription, billing and CRM specialist Paywizard.

One in four of the more than 6,200 consumers Paywizard surveyed reported having canceled a digital pay-TV service in the previous 12 months because of poor customer experience. More than 8 in 10 (84%) said they would terminate their pay-TV subscriptions if customer service and support failed to meet their needs or expectations, Paywizard highlights in a news release.

On the flip side, 46 percent of survey respondents across the U.S., U.K., Australia, Brazil, Germany and Singapore said they had stayed with their current digital pay-TV service providers because of positive customer experience.

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Paywizard also found that younger subscribers (under 35) placed a greater value on customer experience when it comes to deciding to stay or switch digital pay-TV providers. Nearly 6 in 10 (57%) said they had chosen to stay with their current providers as a result of positive customer experience.

In sum, the survey reveals that 3 in 4 pay-TV subscribers (74%) who had added a digital pay-TV subscription over the past year wound up raising their overall television and entertainment spending.

Pay-TV Customer Experience
On the other hand, more than 25 percent managed to reduce total TV spending by downgrading general pay-TV packages or cutting other subscriptions. It’s clear that shifting subscriber attitudes and preferences are creating winners and losers among traditional pay-TV and subscription-based OTT service providers, and that all market players could benefit by improving the customer experience, according to Paywizard.

Raising the significance of Paywizard’s survey results, roughly 1 billion pay-TV subscriptions are up for grabs this year, chief marketing officer Bhavesh Vaghela pointed out.

“We are seeing a fundamental shift taking place in the pay-TV marketplace, with customer experience emerging as critical to television service providers’ success – in many cases, their very survival,” he was quoted in the press release.

“While content and cost are often cited as the elements influencing pay-TV uptake and cancellations, the survey findings demonstrate that customer experience has undeniably emerged as a major driver.”

This is the case for OTT video providers in particular, Vaghela added. “Simply relying on a decent content offering is no longer nearly enough.”

That said, cable, satellite and telco pay-TV providers could probably gain a lot if they followed OTT video service providers’ lead and responded more quickly and substantively to subscribers’ needs and desires, researchers said. To some degree, they are doing so – launching their own OTT services, adding more in the way of personalization features and VOD content and offering much smaller, niche-oriented bundles of channels and content.

Pay-TV provider OTT services of live linear content (thing DIRECTV NOW for example) will generate $7 billion in mature pay-TV markets by 2021, according to a recently released report from ABI Research. That’s a big jump from just over $1 billion today.

Of course, there are risks and rewards to pursuing strategies that would likely disrupt their existing business lines and revenue streams.

For instance, offering so-called ¨skinny bundles¨ composed of channels selected to meet the viewing preferences of specific subscriber groups has the potential to attract itinerant younger viewers, Altman Vilandrie & Co. highlighted in its seventh annual consumer video survey. Pay-TV providers that do so open themselves to the risk of cannibalizing their existing customer bases, however.

In terms of advice, Paywizard says that generally speaking, pay-TV operators need to find ways of avoiding subscribers taking “dip-in, dip-out” attitudes and behavior. Survey results revealed that 64 percent of survey respondents who had not signed up for a new subscription in the past would cut back on other digital subscriptions or downgrade a general service bundle to minimize the cost if they were to sign up for a new or additional cable or OTT pay-TV service.

Image courtesy of flickr user Alyssa & Colin.

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