With the rise of over-the-top entertainment providers like Netflix and Amazon Prime, our FocusVision team and market research agency Zanthus, wanted to understand more about how consumers are behaving in the fast-changing world of in-home entertainment.
Do satellite and cable providers face an uncertain future? To find out, we devised a study among 1008 respondents in the USA, using our integrated Quant+Qual online survey and reporting tools.
We found that as the market of younger consumers grows, Pay TV providers are facing significant challenges in remaining competitive with over-the-top providers. Not least, the fact that 41% of satellite and cable customers are planning to cut back or drop their service, made companies sit up and pay attention.
Key findings Pay TV providers must pay attention to in 2017
- 41% of Pay TV customers are planning to either cut back or drop their service completely, compared to only 16% of OTT customers
- OTT customers are almost 20% more likely to recommend their service compared to Pay TV
- Only 27% of Pay TV customers are satisfied with the value of the service compared to 59% of OTT customers
- Although OTT providers score higher than Pay TV on almost every metric, there is scope for Pay TV to make wins in some areas and possibly arrest the decline in satisfaction.
The study found that US consumers are about as likely to use over-the-top providers (75%), as they are Pay TV (76%), while 51% use both Pay TV and OTT. Unsurprisingly use of OTT has really captured the younger audience with their use higher among millennials (those under 34) – 84% of under 34’s subscribe to an OTT provider compared to 74% of 35 – 44-year-olds and only 60% of 45-54-year-olds.
PayTV is down, but not out
Pay TV still captures more viewing hours than OTT, with an average of 18 hours a week being watched overall, compared to 11 hours a week for OTT. But the study showed that the younger the participant, the less their viewing hours of pay TV, with under 24’s the only segment watching more over-the-top-content than pay TV.
The study found that OTT providers have a stronger brand affinity than Pay TV, with OTT customers 19% more likely to recommend the service (Pay TV customers are 43% likely to recommend versus 62% of OTT customers).
OTT users do not express a need to cut or drop their service as their relationship with their provider is frictionless, with no contracts or bundles and at a comparatively low cost. However, as we saw earlier, 41% of existing Pay TV customers stated they plan to either cut back or drop their service in the next year.
But this is not the end of this particular tale.
Although satellite and cable companies are never going to be able to compete with the likes of Netflix and Amazon on cost, there are other metrics in which they can and should compete. We are still reviewing the rich data we captured for this study, we are producing a more detailed report and will release more data in due course.
Our findings caused quite a stir in the media! Read more: