Report: Destination Television Boosts Pay-TV Viewing, Despite OTT Gains

New research from J.D. Power provides evidence that pay-TV subscribers’ behavior is growing in complexity. The bottom line is that there is good news for everybody and that viewership share likely is not a zero-sum game. Key to traditional pay-TV popularity is what researchers called “destination television.”

The firm found that viewers are growing more comfortable with OTT programming in comparison to traditional programming. However, viewers are watching almost an hour more of regularly schedule programming than they did two years ago.

“Although it seems like the world is consumed with the idea of cord-cutting in the wake of Hulu’s first Emmy and the proliferation of new shows on Netflix and Amazon, the number of current pay-TV customers who plan to cut the cord has actually declined, and the number of hours spent watching old-fashioned, time-slot television is growing,” Peter Cunningham, the Technology, Media, and Telecommunications Practice Lead at J.D. Power said in a press release. “We’re seeing a trend toward the coexistence of traditional and alternative service providers, with each offering some lessons to the other on how best to drive an increase in customer satisfaction.”

J.D. Power researchers drew upon three interrelated studies in reaching their conclusions. The studies include the J.D. Power 2017 U.S. Residential Television Service Provider Satisfaction Study; the J.D. Power 2017 U.S. Residential Internet Service Provider Satisfaction Study and the J.D. Power 2017 U.S. Residential Telephone Service Provider Satisfaction Study.

Destination Television
Researchers shared key findings:

• Streaming services make gains as traditional TV declines: Customer satisfaction with the overall streaming video service experience (7.91 on a 10-point scale) and performance and reliability (7.97) has slightly improved year over year. Conversely, overall satisfaction with traditional pay-TV services has fallen to 710 this year (on a 1,000-point scale) from 724 last year.
• Destination TV viewing reaches three-year high: Despite growing satisfaction with streaming video services and widespread use of DVR and video on-demand, the number of hours spent watching regularly scheduled television programs has increased by nearly an hour between 2015 and 2017. In a typical week, households have spent an average of 17.4 hours watching regularly scheduled programming this year, up from 16.6 in 2015.
• Percentage of likely cord-cutters declines slightly: The percentage of customers who say they plan to cut the cord on pay-TV during the next 12 months has declined to 8% this year from 9% in 2016.
• Mobile app adoption is low, but satisfaction is high among early adopters: Nearly two-thirds (65%) of pay-TV customers never watch content from their provider via mobile app, and only 6% say they watch via mobile on a daily basis. However, overall satisfaction with pay-TV providers increases as the frequency that customers use a mobile app to watch their provider’s content increases.
• Billing errors present challenge and opportunity: Though the incidence of billing errors has steadily decreased over the past five years, hidden fees continue to be the most common billing error by a large margin. Provider efforts to address this have paid off. Billing satisfaction among customers who experienced a billing error and are given an automatic credit or refund slightly exceeds that among customers who did not experience any billing errors (768 vs. 760, respectively).

Residential provider rankings also were released.

• In the Internet service provider satisfaction category, Verizon ranked highest in the East region (737); AT&T/DIRECTV ranked highest in the North Central region (699); Charter Spectrum ranked highest in the South region (717) and Cox Communications ranks highest in the West region (706).
• In the telephone service provider satisfaction category, Verizon ranked highest in the East region (757); AT&T/DIRECTV ranked highest in the North Central region (733) and South region (742) and Cox Communications ranks highest in the West region (734).
• In the residential television service provider category, AT&T/DIRECTV performed highest in overall satisfaction in the national segment with a score of 731.  Due to small market share, Verizon was not eligible for the national segment but did rank highest in the East region (755). DISH Network ranked highest in the North Central region (722) and South region (740). AT&T/DIRECTV ranked highest in the West region (726).