When it comes to cord cutting, some subscribers have their scissors at the ready, and others have already used them in the last few years. It’s obviously a thing that only the most ostrich-like people can deny. However, some research shows traditional pay TV operators still have many cards to play if they develop new content discovery options across multiple platforms, and continue to take advantage of live broadcasts of high-profile events.
The cord-cutting issue is apparent in new consumer research released on Wednesday by Parks Associates. The research firm reports the percentage of U.S. broadband households that use only antennas to receive TV has steadily increased since 2013 to reach 15 percent. The “360 View: Entertainment Services in U.S. Broadband Households” report reveals this increase coincides with a drop in pay TV subscriptions and an increase in internet-only video subscriptions.
“Pay TV subscriptions have dropped each year since 2014, falling to 81 percent of U.S. broadband households in Q3 2016,” Brett Sappington, senior director of research at Parks Associates, observes. “Several factors have played a part in this decline, including growth in the OTT video market, increasing costs for pay TV services, and consumer awareness of available online alternatives.”
Notably, the research firm indicates a decline in pay TV satisfaction in each of the last three years, and it reports that only one-third of pay TV subscribers are “very satisfied” with their pay TV service. According to Parks Associates “OTT Video Market Tracker,” 63 percent of U.S. broadband households subscribe to at least one OTT service and 31 percent of U.S. broadband households have multiple OTT service subscriptions.
“Pay TV providers are adapting to address a fundamentally different video services market than existed three years ago. Challenges still remain for consumers in aggregating and discovering their favorite content and being able to watch on their preferred screen. Live broadcasts of high-profile events remain a challenge for online delivery, though pay TV and broadcast TV conquered live distribution long ago,” Sappington says. “These challenges represent areas in which pay TV providers, or new entrants, can still win consumer attention, viewership, and revenue.”
Another interesting tidbit from the Parks research is that in 2016, twice as many subscribers downgraded (12 percent) their pay TV service than upgraded (6 percent).
“With the continued decline of traditional pay TV subscriptions, 2017 will be characterized by the rise of online pay TV services,” Sappington observes. “While traditional pay TV provides superior viewing quality, OTT video commonly excels in discovery, portability, and personalized user experiences. Consumers care less about the network used to deliver the content than they do about access to the content, ease of use, and convenience.”
Another recent CED article focusing on cord-cutting data is here.
