Findings from research firm Parks Associates indicates that 60 per cent 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 company’s 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 per cent in a year. The 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.
“If there was ever a time when entertainment service providers believed that OTT was a phase, they are now convinced of its permanence,” advises 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 per cent 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.”
According to Parks Associates, 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:
“Pay-TV providers must keep offering their most valuable content, which includes live sporting and cultural events,” suggests Hanich. “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 stabilises.”