Are you down with OTT?
Pay-TV has taken a tumble that it may not recover from, or at least it won’t walk the same after. And the thing it tripped over was OTT.
TiVo recently released a 2017 Video Trends Report, and according to the study, out of the 84.8% of respondents who have pay-TV service, 48.9% are planning to cut, change or switch pay-TV providers — or at least considering it.
OTT is winning the fight for a few reasons; its convenient, as long a person has their phone they have their entertainment; more customized packages, consumers can tailor the programing to fit their viewing habits; and it’s cheaper, consumers don’t have to pay for 50+ channels they don’t watch in order to gain access to the seven channels they do.
For the third quarter in a row, the three main reasons for cutting pay-TV service were:
- “Price — Too expensive” — 79.7%
- “I use an internet streaming service, such as Netflix, Hulu, Amazon Video, etc.” — 57.6%
- “I use an antenna to get the basic channels on my TV.” — 32.5%
According to the report, 77.3% of respondents said they would like to pay for only the channels they watch. And on average they chose 19 channels to compose their ideal line-up. In the U.S., ABC, CBS, and the Discovery Channel were among the top three chosen (for the 4th quarter in a row). Canada’s top three channels consisted of HBO, The Discovery Channel, and CTV.
With cables companies charging north of $60 for these 19 channels its no surprise that 48% of pay-TV customers are planning to ditch the service. According to the report, the average price respondents are willing to pay for the top 20 channel is only $28.31.
According to the report, overall adoption of SVOD services across all respondents increased 4.9% y/y, 11.2% over two years and 16.5% over three years.
With eminent doom approaching traditional pay-TV providers, some have begun to adapt with the changing industry by releasing TV Everywhere (TVE) apps that allow consumers to use their cable/satellite service from their phone. Out of those surveyed 59% percent used their pay-TV provider’s TVE app on a weekly basis, which was a slight increase y/y; 13.6% over two years, and 19% over three years. Though this may slow down the deterioration of traditional pay-TV, chances are it won’t stop it, unless companies are willing to do some serious remodeling.