Although virtual MVPDs are focused on delivering slimmed-down TV channel bundles, DirecTV Now’s “Just Right” package appears to be the most aligned when it comes to delivering a mix of the “core channels” consumers desire most, TiVo found in its Q2 2017 Online Video and Pay TV Trends study.
The lineups of the OTT TV players analyzed in the new study (YouTube TV, Hulu, Sling TV and DirecTV Now) have considerable overlap, but TiVo found that DirecTV Now’s Just Right package delivers 85% of “core channel coverage,” followed by its “Live a Little” package (66.7%), Sling TV’s Orange/Blue combo package (66.7%), Hulu's new live TV offering (63%), PlayStation Vue (59.3%), Sling TV Orange (55.6%), Sling TV Blue (44.4%) and YouTube TV (37%).
TiVo’s Data Science Team built this model by generating seven statistically significant bundles based on the most commonly selected à la carte channels and cross-referencing them with existing virtual MVPD services and packages. Beyond getting a fix on what those "core" channels are, TiVo's analysis also uncovered three key trends/groups: Sports, Lifestyle/Travel and Kids.
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DirecTV Now’s packages “contain the most channels among the OTT bundles analyzed, and therefore score high on coverage metrics,” TiVo said. “While this may not be in the spirit of a true ‘skinny’ bundle, it does represent consumers’ desires and behavior.”
With all of those OTT TV providers factored in TiVo said their skinny bundles only match the preferences of 43.6% of respondents.
TiVo’s suggestion is that virtual MVPDs should build their slimmed-down packages based on interests or viewing behavior, offering, for example a 35-channel package for sports fans, or a similar one for travel enthusiasts or kids.
“While some channels would overlap, the overall packages would be much more tailored to the individual, returning to a true à la carte spirit,” the company said.
Though virtual MVPDs tend to be focused on skinny bundles tailored for a segment of the pay TV universe, the trend isn’t lost on more traditional MVPDs, including Comcast and its beta launch of Xfinity Instant TV, whose core package of local broadcast TV is complemented by a range of genre-focused add-on packages.
TiVo’s study, based on a survey of 3,069 adults in the U.S. and Canada, also found that most consumers (77.5%) want an a la carte option that lets them pay only for the channels they watch. They’d also be willing to pay $28.79 per month for a package of self-selected channels, or $1.73 per channel. On average, respondents said 19 channels would make up their “ideal” lineup.
The top five channels they’d be willing to pay for: HBO ($2.58), Tennis Channel ($2.45), Fusion ($2.38), Telemundo ($2.31) and Showtime ($2.21). The most popular channel, selected by all respondents, was ABC, followed by Discovery Channel, CBS, History, and Fox.
Per the survey, 22% said they had cancelled TV service in the past 12 months, up 4.8 year-over-year, while antenna use to access basic TV channels has jumped 12.4% over a two-year period.
The top three reasons for frustration with pay TV continue to be costs, poor service, and poor customer service.
On the churn front, of the 83.9% of respondents who do get pay TV, 8.9% have switched providers in the last three months. When asked if they intend to leave their current provider in the next six months, 6.3% plan to cut their current service, 8.1% expected to switch to another pay TV provider, and 4.5% planned to switch to an online service or app.
Use of voice search is also on the rise, as 10.9% said they use it to find something to watch on TV, and 19.3% said they want voice search functionality.
Among those that have voice search, 87.4% use it weekly, and 31.4% said they use it to conduct four to seven searches per week.