Competition from dMVPDs puts new spin on U.S. market for pay TV subsWednesday, June 6th, 2018
Competition from dMVPDs Puts New Spin on Competitive Market for Pay TV Subs; Consumers Less Bullish about Multichannel Value Proposition
NEW ROCHELLE, N.Y. — Three-quarters (76%) of TV content viewers report subscribing to a traditional pay TV—cable, satellite, or telco—service, down from 86% in 2014, reveals the latest data from Horowitz Research’s State of Pay TV, OTT and SVOD. According to the study, just 71% of 18-34 year-olds subscribe to a traditional pay TV service, compared to 75% of 35-49 year-olds and 81% of TV viewers 50+. Although TV viewers are watching more TV content than ever before—the study reveals that TV content viewers report watching an average of 6.5 hours of TV a day—the fact that there are many lower cost services competing for consumers’ video budgets is impacting the perceived cost-benefit ratio of traditional pay TV.
According to the study, 74% of cable TV subscribers, 78% of satellite TV subscribers, and 80% of fiber TV subscribers say that they are satisfied with their TV service overall. However, when asked how “worth it” the TV services they subscribe to are, cable, satellite, and fiber TV subscribers are less likely to say that their TV service is worth it compared to most over-the-top services. Seventy percent (70%) of satellite and fiber subscribers and 62% of cable subscribers say that their service is worth it; between 8-13% say their pay TV is not worth it. On the other hand, 91% of Netflix subscribers say that Netflix is worth the money, and 83% say that Hulu is worth it. Digital pay TV providers Sling TV and Hulu with Live TV also fare better than traditional pay TV, with 79% of Sling TV subscribers and 77% of Hulu with Live TV subscribers saying their service is worth it.
In addition to exploring the value of TV and video services, the study also asked how interested TV viewers would be in either switching to a service like this from their cable/satellite/fiber service (if they currently had pay TV service) or subscribing to one (if they did not currently have pay TV service). Nearly half (48%) of pay TV subscribers express interest in a dMVPD; this rises to 58% among 18-34 year-olds. While these data are based on a broad, general description of dMVPDs and may not translate into actual cord-cutting, they do indicate a willingness among consumers to explore these services, and cost plays a major role. Nearly all (93%) of those interested in dMVPDs cite the lower cost as a key factor why they are interested in a dMVPD. Beyond cost, the viewing and technology experience that consumers have come to expect from over-the-top services is highly valued and, in many cases, more user-friendly than many traditional MVPDs’ set-top box guides.
“The majority of subscribers to over-the-top services like Netflix, Hulu, and Amazon Prime are also multichannel subscribers; a smaller percent of them are cord-cutters and cord-nevers. Those services are essentially VOD ‘on steroids,’ and they have tended to supplement, rather than cannibalize, the services offered by traditional providers,” says Adriana Waterston, SVP of Insights & Strategy for Horowitz. “The new dMVPDs do compete directly with traditional providers by offering linear television, including sports and local channels in many markets, DVR service, and other elements of traditional multichannel, but for a lower price and with the app-driven, consumer-friendly OTT experience that has transformed consumers’ expectations about how and where they can access their content. It is incumbent on traditional players to continue to assert their value proposition at the same time as they pivot their businesses to serve consumers’ evolving expectations.”
The full report provides analysis by total TV content viewers 18+, as well as key demographic and viewer segments, including age, multichannel subscribers and non-subscribers, family households, and more. Additional analyses by Hispanic, Black, and Asian audiences will be published under separate cover.