Offering a deeper look into the increasingly volatile world of pay TV, a new survey from Digitalsmiths found that 46.6% of respondents are at risk of cutting the cord or leaving their current pay TV provider for another.
Digitalsmiths, the video search and discovery firm acquired last year by TiVo, revealed those findings in its Q2 2015 Video Trends Report, based on a survey of 3,210 adults in the U.S. and Canada.
The survey found that 7.7% of respondents switched pay TV providers in the last three months, a 1.7% year-over-year increase. Over the next six months, 14.9% are at risk to cut service (4.5%), change providers (8.1%), or switch to an online app or rental service (2.3%).
While the cost of service factors into this trend (61.6% said they pay more than $100 month to their provider), the group that is “unsatisfied” with their service rose to 6.1% in the Q2 survey, while 76.6% claimed to be “very satisfied” or “satisfied.” Those in the unsatisfied camp cited reasons such as increased fees and poor customer service.
A La Carte and OTT
Digitalsmiths also shed some light on the demand for a la carte, skinny bundles and the rising popularity of OTT services.
On the OTT front, the surveyed group was most familiar with Hulu (44.7%), compared to HBO Now (31.2%); Showtime’s new standalone OTT offering (17.1%); CBS All Access (10.8%); Sling TV (9.7%); and PlayStation Vue (9%). Consumer awareness for that full group rose 1.8% in Q2 versus Q1 2015. About 42.5% were not familiar with those offerings.
Digitalsmiths also found that 79.2% said they would like to pick only the channels they watch (down 2.2% in Q2 versus Q1 2015), and see a selection of 17 to 18 channels as the ideal lineup.
The average price they’d pay for that channel mix was $39.50 per month. Almost 20% said they’d be willing to pay $10 to $20 per month, 17.3% said they’d pay $21 to $30 per month, and only 3.1% said they’d pay $81 or more per month.
“These numbers illustrate clear demand by respondents for the à la carte Pay-TV model,” Digitalsmiths noted in the study, which also found that 35.1% were overwhelmed by the number of channels available to them. “While the cost of programming continues to increase, consumers could become less tolerant of paying for unvalued programming.”
For those who want a la carte, ABC was the top channel selected, followed by Discovery Channel, NBC, History, CBS, A&E, Nat Geo Channel, Fox, HBO, PBS, Comedy Central, The Weather Channel, AMC, Food Network, Animal Planet, TLC, TBS, TNT, CNN and HGTV. The bottom five of the group were Velocity, Telemundo, Univision, Fusion and Ovation TV.
‘Cord-Cheating’ and OTA
The study took a fresh look at “cord-cheating,” where subs seek VOD fare and linear TV from parties other than their pay TV provider. In Q2, 57.7% subscribed to a service such as Netflix,Hulu, Amazon, Sling TV, and HBO Now, a figure that grew 7% year-over-year, and 22.8% over a two-year span.
Of the 15.7% surveyed who do not take a traditional pay TV service, 33.3% use an antenna to get basic TV channels.
A positive trend for pay TV is increased awareness of authenticated TV Everywhere services. In the Q2 survey, 43.3% said they were aware that their pay TV provider offered TVE, up 4.8% year-on-year, and up 11.2% over two years.
Almost one-fourth of respondents said they have their provider’s TVE app, up 2.3% year-on-year.
Of those who do tap into TVE, 45.4% use it on a weekly basis, up 3% year over year. However, 54.6% said they access those TVE offerings “rarely” or “never.”
The study also highlighted the popularity of apps from programmers and broadcasters. In Q2, 27.8% said they have installed one on their tablet and/or smartphone.
In terms of installations, the top apps in this category were: HBO Go (5.9%), Hulu (5.7%); ABC (5.2%); WatchESPN (4.9%); A&E (4.5%); CBS (4.4%); and NBC (3.2%).
Digitalsmiths’ study also centered some results on the vendor’s bread and butter – search and discovery. About 22.2% said that their provider makes TV and movie recommendations to them, up 6% over two years, and 92.5% felt that the recommendations made were “always” or “sometimes” accurate, up 2.4% versus Q1 2015.
Digitalsmiths clients include AT&T/DirecTV, Bright House Networks, Charter Communications, Dish Network, Foxtel, FOX Sports, Sharp Electronics, Time Warner Cable and Verizon, among others.