SVOD giants put increased squeeze on traditional TV players | Media Analysis | Business
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The latest edition of Horowitz Research’s State of Pay TV, OTT and SVOD report has found that lower cost online video services are now significantly impacting the perceived cost-benefit ratio of traditional pay-TV offers.

How Worth It TV Services Are For Money SpentThe study found that just over three-quarters of TV content viewers report subscribing to a traditional pay-TV service through cable, satellite or telco operators, down from 86% in 2014. Moreover, just 71% of 18-34-year-olds subscribe to a traditional pay-TV service, compared with 75% of 35-49-year-olds and 81% of TV viewers over 50.

TV content viewers report watching an average of 6.5 hours of TV a day, with 74% of cable TV subscribers, 78% of satellite TV subscribers and 80% of fibre TV subscribers saying that they are satisfied with what they are watching overall.

Yet when asked how worth it the TV services they subscribe to are, cable, satellite and fibre TV subscribers indicated that they were less likely to say that their TV service was worth it compared with most over-the-top services. Seven-tenths of satellite and fibre subscribers and 62% of cable subscribers say that their service is worth it; between 8-13% say their pay-TV is not worth it.

By contrast, 91% of Netflix subscribers say that their service is worth the money, and 83% value their Hulu accounts. Skinny services Sling TV and Hulu with Live TV also fare better than traditional pay-TV, with 79% of Sling TV subscribers and 77% of Hulu with Live TV subscribers saying their service is worth it.

When asked how interested TV viewers would be in either switching to a service like this from their cable/satellite/fibre service or subscribing to one if they did not currently have pay-TV service, nearly half (48%) of pay-TV subscribers expressed interest in a digital MVPD offer. This rose to 58% among 18-34-year-olds.

Even though Horowitz cautioned that while these data are based on a broad, general description of dMVPDs and may not translate into actual cord-cutting, it emphasised that they do indicate a willingness among consumers to explore these services, and cost plays a major role. Nearly all (93%) of those interested in dMVPDs cite the lower cost as a key factor why they are interested in a dMVPD. Beyond cost, the viewing and technology experience that consumers have come to expect from over-the-top services is highly valued and, in many cases, more user-friendly than many traditional MVPDs’ set-top box guides.

“The majority of subscribers to over-the-top services like Netflix, Hulu, and Amazon Prime are also multichannel subscribers; a smaller percent of them are cord-cutters and cord-nevers. Those services are essentially VOD ‘on steroids,’ and they have tended to supplement, rather than cannibalize, the services offered by traditional providers,” said Adriana Waterston, SVP of Insights & Strategy for Horowitz. “The new dMVPDs do compete directly with traditional providers...It is incumbent on traditional players to continue to assert their value proposition at the same time as they pivot their businesses to serve consumers’ evolving expectations.”