Cost, User Experience Driving OTT Video Adoption

With pay-TV subscriptions down 10% among respondents in a new survey from Horowitz Research, the study found just 71% of 18-34 year-olds subscribe to a traditional pay TV service (cable, satellite, or telecom), compared to 75% of 35-49 year-olds and 81% of TV viewers 50 and older.

Although TV viewing remains bullish — respondents watch an average of 6.5 hours of TV a day — the reality that there are many lower-cost services competing for consumers’ video budgets is impacting the perceived cost-benefit ratio of traditional pay-TV.

According to the study, 74% of cable TV subscribers, 78% of satellite TV subscribers, and 80% of fiber TV subscribers say that they are satisfied with their TV service overall.

However, when asked how “worth it” the TV services they subscribe to are, cable, satellite, and fiber TV subscribers are less likely to say that their TV service is worth it compared to most over-the-top services.

Seventy percent of satellite and fiber subscribers and 62% of cable subscribers said their service is worth it; between 8% and 13% said their pay-TV is not worth it. On the other hand, 91% of respondents with Netflix said the service is worth the money; 83% among Hulu subs.

Digital pay-TV providers Sling TV and Hulu with Live TV also fare better than traditional pay-TV, with 79% of Sling subs and 77% of Hulu with Live TV subs voicing their approval.

In addition to exploring the value of TV and video services, the study also asked how interested TV viewers would be in either switching to a service like this from their cable/satellite/fiber service (if they currently had pay-TV service) or subscribing to one (if they did not currently have pay-TV service).

Nearly half (48%) of pay-TV subs expressed interest in online TV; which rose to 58% among 18-34 year-olds. While the data is based on a broad, general description of online TV and may not translate into actual cord-cutting, it does indicate a willingness among consumers to explore these services, and cost plays a major role.

Nearly 93% of respondents interested in online TV cited lower cost as a key factor. In addition, viewing and tech features among OTT services remains highly valued and, in many cases, more user-friendly than many linear TV set-top box guides.

“Over-the-top services like Netflix, Hulu, and Amazon Prime are … essentially VOD ‘on steroids,’ and they have tended to supplement, rather than cannibalize, services offered by traditional providers,” Adriana Waterston, SVP of insights & strategy for Horowitz, said in a statement.

“[Online TV does] compete directly with traditional providers by offering television, including sports and local channels in many markets, DVR service, and other elements of traditional TV, but for a lower price and with the app-driven, consumer-friendly OTT experience. 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.”

 

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