Americans turning to alternative OTT video and movie streaming, such as Netflix, Hulu and YouTube, actually present more of a threat to cable, satellite TV and IPTV service providers’ revenue streams than do ‘cord cutters’ who cancel their subscriptions.
So-called ‘cord throttlers‘ represent a “massive segment of the subscribing population,” according to the NPD Group’s Russ Crupnick, as opposed to cord cutters, who still represent a small percentage.
“Even though many consumers are paying for more content from their TV-service providers in the form of premium channels and video-on-demand, there’s still quite a lot of alternative video downloading and streaming activity going on,” Crupnick, NPD senior vice president and entertainment analyst, said. “There may also be too much emphasis on so-called ‘cord cutters’ who represent a small group, as opposed to potential ‘cord throttlers,’ who are a massive segment of the subscribing population.”
Of total US TV subscribers – cable TV, satellite TV and IPTV – 27% also subscribe to Netflix. Almost half also pay for premium movie or sports channels and nearly one-quarter (24%) watched movies via both paid and free video-on-demand (VoD) from their service providers, according to NPD’s “Entertainment Trends in America” report. More Comcast subscribers (41%) used VoD as compared to other service providers’ customers. Verizon VoD user base was the second largest at 38%, with Time-Warner following at 20%.
“With all the various methods consumers now have to download video, TV-service providers would be in a better competitive position if they could expand their content offerings and improve on-screen search functionality,” Crupnick added.
Nearly three of four (73%) of TV subscribers that used Netflix, streamed video for free or paid for Internet video downloads and rentals also have a cable, satellite or IPTV subscription, NPD found.
Over 10% streamed movies for free and the same percentage streamed TV programs for free. TV networks themselves are the most popular sources for free online TV content.
At 37, the average OTT video viewer is five younger than the average cable TV viewer. This group also includes more students, according to NPD.
“Most movie and TV viewers who use OTT options also subscribe to cable TV, satellite TV, or IPTV services, where VOD and premium channels represent high margin add-ons,” Crupnick commented.
“These services provide operators with an opportunity to bond with their customers and gain more revenue per user. If the programming and user experience aren’t on par with digital alternatives, operators could find themselves increasingly sharing their customers with Netflix or other OTT services, like Apple TV and Roku.”