Parks: Cord-Cutters Spending $85 Monthly on OTT Video Services

New research from Parks Associates finds cord-cutters are spending $85 per month on average for their online pay-TV or standalone subscription-based services, roughly $30 less than what they were paying for traditional pay-TV service.

The Dallas-based research firm’s Quantified Consumer: Cutters, Nevers, and the Rebundling of Video, examines consumer trends in unbundling video services and the recent phenomena of consumers re-bundling their service portfolio because of a fragmented video content marketplace.

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“Cost concerns drove many consumers away from traditional pay-TV, and OTT services are delivering on the promise that they can offer desired video content at a considerably lower price point,” Elizabeth Parks, president of Parks Associates, said in a statement.

Parks said the data revealed that 47% of cord-cutters subscribe to four or more OTT services.

“In order to have an optimal video portfolio, they are creating their own video bundles by stacking OTT services,” she said.

Cord-cutters currently spend nearly twice as much monthly on OTT services as cord-nevers. There are more than 6 million cord-nevers, U.S. broadband households that have never subscribed to traditional TV, and are also less likely to own key streaming video products such as smart TVs and streaming media players.

By contrast, 58% of cord-cutters own a smart TV, which is roughly equivalent to the national average, so cord-cutters demonstrate an affinity to video content and services that make them a valuable segment for providers to target, according to Parks.

“As they migrate away from traditional pay-TV, cord-cutters seek service offerings that more closely meet their video content needs with the added value of flexibility at a lower cost,” Parks said. “OTT services have to continually deliver flexibility and customization at a reasonable cost to keep these subscribers engaged and retain them on an ongoing basis.”

IHS: Online Video, Social Media Usurping Traditional TV Consumption

With the rise in over-the-top video platforms coupled with ongoing social media obsession, new data from IHS Markit suggests traditional linear television consumption across all distribution channels in the United States and Europe is declining.

Total daily video consumption per person per country topped 273 minutes in 2018 — down about 4% from more than 284 minutes per person/country in 2013.

In the study first reported by Advanced-Television.com, London-based IHS contends the trend underscores consumers’ ongoing migration toward OTT video and away from traditional linear TV.

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“During previous years, non-linear television viewing was largely additive to traditional linear TV viewing, driving up the total number of minutes watched,” analyst Rob Moyser said in a statement. “However, non-linear now has become an alternative for linear TV for many consumers. As a result, total cross-platform viewing time is returning to levels seen prior to the rise of on-demand viewing.”​

Indeed, daily online video consumption of content longer than 15 minutes increased by six minutes in 2018 — driven largely by Netflix.

Social media consumption of video increased by eight minutes per day/person, and when combined with online video, totaled 303 minutes per person/day. That compared to 299 minutes in 2017.

“Mobile devices have become a key area of growth in terms of video consumption, particularly out of the home, as data plans become more affordable and screen sizes increase,” added analyst Fateha Begum. “Connected living room devices, however, present new opportunities for social platforms to reach wider audiences particularly as consumer appetite for short-form viewing improves.”