April 10, 2018
In an age of over-the-top video services featuring loss-leader pricing to premium content, the pay-TV ecosystem continues to struggle justifying its cost.
New data from Parks Associates found that 10% of U.S. broadband households switched providers, downgraded their service, or cancelled pay-TV service in the past 12 months, primarily because of a negative perception of the service value, including statements that the “service wasn’t worth the monthly cost” or complaints that the service provider increased the price of the service.
By comparison, 77% of U.S. broadband households currently subscribe to pay TV, a drop from 81% in late 2016.
“Poor perceived value is the leading factor driving cord cutting, downgrading services, or switching providers,” Brett Sappington, senior director of research, said in a statement.
Pay-TV operators – notably Comcast – are fighting back. The nation’s No. 1 cabler now offers direct-access to SVOD services Netflix, Pandora, Acorn TV, in addition to YouTube.
Parks contends other pay-TV strategies countering subscriber loss could include promotional options and free or subsidized hardware such as routers, set-top boxes, and telephone handsets.
Cord-cutters and cord-shavers indicate these types of offers could entice them to keep their traditional pay-TV subscriptions,” according to Sappington.
“It is a primary reason for consumer interest in online pay-TV services, which are typically available at a much lower price than traditional pay TV,” he said.