76% of TV viewers now subscribe to a traditional pay TV service, down from 86% in 2014, according to Horowitz Research. 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 viewers aged 50 or over. Viewers report watching an average of 6.5 hours of TV a day.
However, 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 fibre 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 fibre TV subscribers are less likely to say that their TV service is worth it compared to most OTT services.
70% of satellite and fibre subscribers and 62% of cable subscribers say that their service is worth it, but between 8% and 13% say their pay TV is not worth it. On the other hand, 91% of Netflix subscribers say that it’s 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.
The study also asked how interested TV viewers would be in either switching to a service like this from their cable/satellite/fibre service if they currently had pay TV service, or subscribing to one if they didn’t. 48% of pay TV subscribers express interest in a dMVPD, rising to 58% among 18-34 year-olds. While this data is based on a broad, general description of dMVPDs and may not translate into actual cord-cutting, it does indicate a willingness among consumers to explore these services and cost plays a major role.
93% of those interested in dMVPDs cite the lower cost as a key factor of why they are interested in it. Beyond cost, the viewing and technology experience that consumers have come to expect from OTT services is highly valued and, in many cases, more user-friendly than many traditional MVPDs’ set-top box guides. Horowitz’s Adriana Waterston commented:
“T
he majority of subscribers to OTT services like Netflix, Hulu and Amazon Prime are also multi-channel subscribers. A smaller percentage of them are cord-cutters and cord-nevers. Those services are essentially VOD ‘on steroids,’ and they have tended to supplement, rather than cannibalise, the services offered by traditional providers.
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 multi-channel, but for a lower price and with the app-driven, consumer-friendly OTT experience that has transformed 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”.
