Virtual multichannel video programming distributors (vMVPDs) may be immature and technically behind their more established competitors—but subscribers, for the most part, don’t care, according to a new vMVPD satisfaction survey. vMVPD is the term increasingly used for streaming pay-TV services such as YouTube TV, Sling TV or DIRECTV NOW that are designed to offer over-the-top alternatives to traditional cable, IPTV or satellite video service.
These services haven’t exploded — at least not yet. Less than 5 percent of more than 2,000 adult broadband users (ABUs) have opted for an alternative streaming pay-TV service, according to The Diffusion Group’s “Q2 Benchmarking the Connected Consumer” report. However, those consumers that have tried such a service generally are satisfied. Almost half – 49 percent – ranked service as “very good” and 37 percent ranked it “good.” Eleven percent were neutral and only 3 percent ranked the services as poor.
“Given that virtual pay-TV services are for the most part a value play, one premised on ‘skinny’ channel bundles at lower-than-cable prices, user value perception is a critical metric,” notes Michael Greeson, President and Principal Analyst at TDG, in a press release. “Early evidence suggests vMVPD providers are doing well in this regard. Users seem okay without the ‘full Monty’ of legacy pay-TV channels, and to be fairly tolerant of the shortcomings that haunt live streaming video, such as buffering, pixilation, and screen freezing.”
Subscribers increasingly are opting for alternative approaches to television delivery. In May, TDG reported that 51.8 percent of cord-cutters in the United States left their traditional subscriptions in 2015 and 2016. This suggests rising popularity of alternative approaches and, in the view of TDG, a likely decline in ARPU among those who remain.
Momentum seems to be building. In April, YouTube TV launched in New York City, Los Angeles, the San Francisco Bay area, Chicago and Philadelphia. At launch, it offered a 40 channel lineup, cloud DVR and other features. More markets were expected to follow. It joined other providers, including Sling TV, DIRECTV NOW and PlayStation Vue.
As time passes, the technical shortcomings likely will be addressed. At the same time, however, perhaps more demanding subscribers beyond early adopters will be targeted. It will be interesting to see if the technical issues are alleviated and, if not, if subscribers grow less forgiving.