If forced to decide between legacy pay-TV or subscription video-on-demand (SVOD) services, nearly three-fifths of dual-service users would choose the former, according to The Diffusion Group’s 7th annual Benchmarking the Connected Consumer study.
That means 43% would opt for streaming services like Netflix and Hulu.“One would be excused for thinking the difference would be more dramatic,” said Michael Greeson, president of TDG. “After all, one is a multichannel TV service with live primetime shows, even live sports; the other an on-demand service with no live programming. Apples and oranges, right?”
TDG’s analysis found convincing evidence that this choice is largely a factor of age. In fact, 65% of 18 to 24s would select SVOD over legacy pay-TV, a rate that declines as age increases. Conversely, 72% of 55 to 65s chose legacy pay-TV over SVOD, a rate than declines as age decreases.
“No, this does not yet constitute perceptual parity,” said Greeson. “But there is no doubt that SVOD has taken and is taking a growing part of mainstream mindshare, especially among younger viewers.”
He added that traditional MVPDs face the growing threat that today’s legacy + SVOD user could very well be tomorrow’s vMVPD subscriber.
“The stage is set,” Greeson said. “The question now is whether pure-play broadband pay-TV providers — those without legacy assets, like Hulu TV — can capitalise on the opportunity.”
Unlike legacy providers that also offer a service like Sling TV and Dish, pure-play OTT operators have no conflict of interest in transitioning SVOD users to multichannel subscribers. The new revenue will be accretive to ARPU, not dilutive, as the linear package also includes the SVOD service. Cannibalisation is thus not a concern for virtual operators as it is for the growing number of legacy providers now dabbling in multichannel streaming services.
