By nScreenMedia’s Colin Dixon
U.S. consumers have better experiences with online TV providers in almost all aspects of the service, except one: technical support. Support could be an edge for traditional providers to exploit since a third of consumers experienced a major outage with their pay TV services in the last year.
Traditional Pay TV, online pay TV headed for parity
New data from UK-based payment specialist Paywizard show how firmly entrenched online pay TV services have become in U.S. households. The company surveyed 1000 adults across the U.S. in the fourth quarter of 2017. 62% of survey participants said they had an online pay TV service, 71% had a traditional pay TV service, and 41% had both. The remaining 8% did not pay for television services from any source.
According to Paywizard, nearly one-third of respondents said they had increased their overall spending on television and entertainment by adding an online service in the last year. 17% said they had cut their overall spending by shaving a specialist subscription or opting for a cheaper package from their traditional pay TV operator.
Three of the top four pay TV services in the U.S. are online services. Netflix is top with 49% of the survey group using it, Amazon Prime instant video is second with 27%, DirecTV is third with 20%, and Hulu fourth with 19%.
People still adjusting their TV package
Though the U.S. pay television market is very mature, consumers are by no means stuck in a rut. More than 2-in-5 say they plan to change their current TV subscriptions within the next six months. 1-in-5 plan to add an online subscription over the same period, while 10% plan to add an online and traditional pay TV subscription.
A quarter of the survey group said they had canceled an online pay TV service in the previous 12 months. This churn rate is surprisingly low. Dish Network reports that average monthly churn was 1.78% in 2017, equivalent to 24% per year. Many Dish customers are locked into 1 or 2-year contracts, whereas most online TV providers require only a single month commitment.
Negative pay TV experiences a rampant problem
Paywizard asked survey participants about negative experiences or issues they have had with their pay TV services. An unexpected price increase topped the list, with 35% highlighting the issue. However, a third of respondents said they had suffered a major outage lasting more than 4 hours. The third highest ranked problem was a tie between two issues. 23% had trouble repairing or replacing a faulty set-top box or another piece of equipment, and the same number found an error with their bill or had trouble making a payment.
Three-quarters of respondents were at least partly unhappy with how their provider addressed the issue. 8% experienced problems that ultimately led to them switching services or cutting them completely.
Technical support an advantage for traditional pay TV providers?
The frequency with which consumers are experiencing serious outages should be a concern to all pay TV operators. However, there could be a silver lining for traditional pay TV providers.
Online pay TV services equaled or exceeded traditional pay TV services in almost every customer experience category tested by Paywizard except one: contacting customer service with a technical problem. In this category, 62% said they had a positive experience with their traditional pay TV service, while 48% said the same for online pay services. While this is good news for traditional pay TV operators, they should not let it go to their head. 22% said they had a negative experience when trying to contact their traditional pay TV operators versus 15% for online pay TV providers.
Why it matters
62% have an online pay TV service, 71% have a traditional pay TV service, 41% have both.
41% plan to change their current TV service mix in the next 6 months, 20% will add an online service.
A third have suffered a major pay TV service outage in the last year.
People find it easier to reach their traditional pay TV with a technical problem than an online provider.
 Online pay TV includes SVOD services like Netflix and vMVPD services like Sling TV
 Traditional pay TV includes cable services like Comcast, satellite services like DirecTV, and Telco TV services like Verizon FiOS TV
 For the purposes of this opinion piece, Pay TV services include both online pay TV and traditional pay TV.