US TV viewers still prefer traditional services
November 26, 2010
An annual study of consumer video consumption habits and platforms conducted by Frank N. Magid Associates has revealed that despite the increased use of alternative video viewing platforms (like VOD set-top boxes, instant streaming, and mobile apps), the vast majority of consumers intend to continue to maintain their traditional subscriptions with cable, satellite, and telco TV providers.
For several years, cable, satellite, and telco TV providers have been working under the assumption that as the use of alternative video viewing platforms grows, consumers will increasingly “cut the cord” and cancel their subscriptions. On the contrary, Magid’s study uncovers several consumer behaviours that should persuade the industry to take a second look at earlier defection forecasts. Findings include:
– Consumers using the greatest number of alternative platforms also tend to spend the most money on traditional subscription services. This finding appears to undermine the view that the use of alternative video viewing platforms will compel consumers to become “cord cutters,” en masse, by cancelling their television subscriptions. In fact, the study shows that alternative video viewing platforms should be considered additive to traditional subscription television.
– Only 10 per cent of consumers express an interest in trying TV show and movie viewing from the Internet to a computer or tablet screen. In contrast, interest surges in viewing this content on a TV screen via a computer connected to the Internet, and it climbs even higher for devices designed specifically to stream content to the TV (such as AppleTV and Roku).
“The average American’s capacity to consume video content is impressive,” said Maryann Baldwin, Vice President of Magid Media Futures. “As new video viewing platforms such as instant streaming and mobile apps proliferate, consumers are simply adding them to their portfolio of video viewing options. Our research indicates that this is definitely not a zero-sum game — at least at this point, it appears that traditional subscription services and alternative viewing platforms can coexist with services like ‘TV Everywhere’ locking in revenues for traditional providers.”
In addition, the study indicates that when the availability of Internet content has caused consumers to cancel their traditional service subscriptions, these circumstances remain the exception. Only a very small minority of consumers are even considering cancelling their subscriptions: Only 1 per cent of consumers report that they have cancelled their subscription service in favour of accessing content available on the Internet, and only 2.5 per cent of consumers use Internet content exclusively.
In terms of future cancellations, only 3 per cent of consumers report that they are even considering cancelling their traditional subscriptions without replacing it with a competing subscription, suggesting a relatively stable subscriber base for traditional providers.
Magid’s study also sheds light on the rate and magnitude of adoption for 3D television sets. Among them: Eight per cent of consumers are very likely to purchase a 3D television set in the next 12 months. To provide context, in the early days of HD adoption, Magid found that 8-10 per cent of consumers said they were very likely to purchase a HD television, while annual adoption reflected only 4-5 per cent growth. Should this pattern repeat, Magid predicts that roughly 5 per cent of households will have a 3D television by the fall of 2011.
Most important, however, is that there has been no change since late 2009 in the proportion of consumers who feel it is important that there is more 3D content. This suggests that the growth in purchases of 3D television sets will not be driven by consumers’ interest in accessing 3D content; instead, the bundling of HD television sets with 3D capabilities presents a more likely short-term growth scenario for 3D adoption.
Taken collectively, Magid’s findings reveal that viewing habits and expectations have calcified somewhat since the demand-driving introduction of HD television sets a decade ago. As a result of this integration of HD television into American life, new areas like 3D, connected TVs, and video streaming should now play a more prominent role in programmer and consumer electronics strategies, with these alternatives considered “additive” to the consumer media experience as opposed to displacing traditional subscription-based video services.