A new study released by Parks Associates, "Pay TV: Perception, Adoption, and Retention," examines how traditional pay-TV and vMVPD services can strengthen revenues following shifting consumers behaviors amid the Covid-19 pandemic. The report reveals that 60% of pay-TV subscribers are interested in streaming movies and TV shows from an online video service as part of their pay-TV subscription.
The study indicates that pay-TV providers are responding to this demand, as the number of pay-TV consumers who receive online video services has spiked nearly 50% in a year. This new 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,” said 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."
With the acceleration in online video service acquisitions, the online pay-tv sector received its fair boost. The average number of OTT services among households that have any OTT service is 3.8, while households with pay-TV services plus an average of at least one OTT service subscribe to 4.2 OTT services. “The good news for providers is consumers often have both pay-TV and OTT—79% of pay-TV households have both pay-TV and OTT subscriptions,” Hanich said. “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.”
At the same time online video grew, cancellation rates for traditional pay-TV have accelerated, with millions of more cancellations occurring in 2020 compared to 2019, placing subscirber stability at question.“Pay-TV providers must keep offering their most valuable content, which includes live sporting and cultural events,” Hanich said. “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 stabilizes.”
Video streaming is the most popular value-added service among pay-TV households, but there is a growing interest in other advanced features: 43% of pay-TV households are interested in having video calls on their TV, 40% are interested in controlling smart home devices and security systems from the TV, 34% are interested in playing video games on the TV through a cloud gaming service.
If there was ever a time when entertainment service providers believed that OTT was a phase, they are now convinced of its permanence. 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.” Kristen Hanich Senior Analyst, Parks Associates.
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