SVOD gaining perceptual parity with legacy Pay-TV

Wednesday, July 12th, 2017 
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TDG: SVOD Gaining Perceptual Parity with Legacy Pay-TV among Dual Service Users, Especially Younger Viewers

  • New Data Points to the Growing Opportunity for Pure-Play vMVPD Services to Transition SVOD Users to Multi-Channel Subscribers

PLANO, TX — If forced to decide between legacy pay-TV or SVOD services, 57% of dual-service users would choose legacy pay-TV, 43% streaming services like Netflix and Hulu. This according to new insights from TDG’s 7th annual Benchmarking the Connected Consumer study.

US - SVOD Gaining Perceptual Parity with Legacy Pay-TV

“One would be excused for thinking the difference would be more dramatic,” notes Michael Greeson, President of The Diffusion Group. “After all, one is a multi-channel TV service with live primetime shows, even live sports; the other an on-demand service with no live programming. Apples and oranges, right?”

So much for conventional wisdom. As it turns out, four-in-ten TV viewers choose SVOD over legacy pay-TV. “No, this does not yet constitute perceptual parity,” says Greeson. “But there is no doubt that SVOD has taken and is taking a growing part of mainstream mindshare, especially among younger viewers.”

TDG’s analysis found convincing evidence that this choice is largely a factor of age. In fact, the relationship is strikingly linear. As illustrated, 65% of 18-24s would select SVOD over legacy pay-TV, a rate that declines as age increases. Conversely, 72% of 55-65s chose legacy pay-TV over SVOD, a rate than declines as age decreases.

“Traditional MVPDs face the growing threat that today’s legacy+SVOD user could very well be tomorrow’s vMVPD subscriber,” says Greeson. “The stage is set. The question now is whether pure-play broadband pay-TV providers—those without legacy assets, like Hulu TV—can capitalize on the opportunity.”

Unlike legacy providers that also offer an vMVPD service like Sling TV and Dish, pure-play BPTV operators have no conflict of interest in transitioning SVOD users to multi-channel subscribers. The new revenue will be accretive to ARPU, not dilutive, as the linear package also includes the SVOD service. Cannibalization is thus not a concern for virtual operators as it is for the growing number of legacy providers now dabbling in multi-channel streaming services.

These insights are based on TDG’s 7th annual Benchmarking the Connected Consumer study, a survey of more than 2,000 US adult broadband users conducted in Q2 2017. For more information about this new study, please contact [email protected] or call 469-287-8060.