Online video integration interests 60% of U.S. pay TV subscribers

Wednesday, February 3rd, 2021
Parks Associates logo

60% of pay-TV subscribers are interested in streaming movies and TV shows from an online video service as part of their subscription

  • New study examines how traditional pay-TV and vMVPD services can grow revenues following changing consumer preferences during COVID-19 crisis

DALLAS — New research from Parks Associates shows that 60% of pay-TV subscribers (accounting for nearly half of US broadband households) are interested in streaming movies and TV shows from an online video service as part of their pay-TV subscription. The study ‘Pay TV: Perception, Adoption, and Retention’ notes that pay-TV providers are responding to this demand, as the number of pay-TV consumers who receive online video services has jumped nearly 50% in a year. This new research examines the consumer perceptions of pay-TV services and features and measures the efficacy of different options pay-TV providers can leverage to retain subscribers. It also contrasts traditional pay-TV services and vMVPD services.

Appeal of Potential New Pay TV Features - U.S.

“If there was ever a time when entertainment service providers believed that OTT was a phase, they are now convinced of its permanence,” said Kristen Hanich, Senior Analyst, Parks Associates. “In late 2019, the market reached the crossover point where the same percentage of US broadband households subscribed to an OTT service as subscribed to a pay-TV service, and now OTT adoption outpaces pay TV by double digits. The good news for providers is consumers often have both pay TV and OTT—79% of pay-TV households have both pay-TV and OTT subscriptions. Providers are in a spot where they must redouble their efforts to engage these subscribers by executing new innovations and business models, or risk accelerating customer losses.”

COVID-19 dramatically accelerated adoption of online video services, providing a small boost to online pay-TV services specifically. The average number of OTT services among households that have any OTT service is 3.8, while households with pay-TV services plus at least one OTT service subscribe to 4.2 OTT services, on average.

At the same time online video grew, cancellation rates for traditional pay TV have accelerated, with millions more cancellations occurring in 2020 compared to 2019. The question now is how stable are the remaining pay-TV customers and how to ameliorate cancellations. Video streaming is the most popular value-added service among pay-TV households, but there is growing interest for other advanced features:

  • 43% of pay-TV households are interested in having video calls on their TV
  • 40% are interested in controlling smart home devices and security systems from the TV
  • 34% are interested in playing video games on the TV through a cloud gaming service

“Pay-TV providers must keep offering their most valuable content, which includes live sporting and cultural events,” Hanich said. “Additionally, they must offer access to streaming, target new service to their interested customers, and perhaps be willing to take a hit on pricing until this chaotic market stabilizes.”

Links: Parks Associates