Less Than 8% Of Consumers Would Cancel Pay TV: Survey

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About 5.5 million U.S. households, or less than 8% of broadband consumers, would consider dropping cable or satellite TV service in favor of online video, DVDs and over-the-air broadcasts -- while roughly half of those are pondering a switch to a new pay-TV provider, according to a survey from Parks Associates.

The survey shows that the primary competitive threat to pay-TV services continues to be other multichannel providers, according to Parks research director John Barrett.

Just 0.5% of broadband households (approximately 350,000 homes) had previously subscribed to pay TV, cancelled it and now watch five or more hours of online video per week. "People who have made the switch to online video are few in number, and they don't watch much TV anyway," Barrett said.

Households likely to cancel or switch cable or satellite TV service watch an average of 10 hours of Internet video each week -- versus a median of less than 1 hour among respondents who are unlikely to drop or change providers -- and express strong interest in "TV Everywhere" services that would allow online access to pay-TV channels, Parks found.

In addition, this group rented more DVDs: The median number of DVD rentals within the last six months was 18, compared with two among all households.

"Nobody is going to rely on online video alone -- households likely to cancel their TV services are going to use a mixture of online video, free-to-air broadcasts and DVDs, including rental services such as Netflix and Redbox," Barrett noted.

Parks said the results are in line with its previous studies, which do not show an significant likelihood of subscriber churn in favor of online video services. An earlier 2009 survey found that 10% of U.S. broadband households were considering canceling pay-TV services, while a 2008 study by the research firm put the figure at 11%.

Cable and satellite TV cord-cutters also appear to be more price sensitive, according to a survey last fall by research firm Interpret LLC.

Consumers who actively watch TV shows on the Internet -- but don't subscribe to cable or satellite services -- have average annual incomes of $42,314, compared with $60,054 for those who watch TV shows online and also subscribe to cable or satellite service, Interpret found.

Parks Associates surveyed about 2,000 broadband heads-of-households 18 and older in the U.S. in December 2009.

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