To cut the cord or not is a conversation that is increasingly taking place in households worldwide, according to a new report from Limelight Networks. In its annual "State of Online Video Survey," the digital content delivery provider suggests that almost 90 percent of respondents, regardless of age, are open to the idea of cancelling their pay-TV service and going all-OTT.
That percentage rate comes with a few caveats. The 1,221 people surveyed in the U.S., Canada, UK and Australia did not directly say they planned to cancel their service. Rather, 10.48 percent said specifically that they "will never terminate" their pay-TV subscription, while the remainder of respondents said they would consider cutting the cord under certain conditions.
The majority of that crowd, just under 38 percent, said that rising pay-TV prices would most likely spur a jump to the OTT lifestyle. Twenty percent don't have a pay-TV subscription at all. And 16 percent said they would consider cutting the cord if the channels they want to watch are available over-the-top.
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Respondents chose under which circumstances they would cancel their cable or pay-TV subscription. (Source: Limelight State of Online Video Survey) |
"Price is a huge consideration; it's why we asked that question," Jason Thibeault, senior direct at Limelight and the report's author, told FierceOnlineVideo. "People said they would cut their subscription if it keeps going up in cost."
The continuing rise in pay-TV rates and the inflexibility of the channel bundles they receive is part of what's driving viewers toward online video.
"People are saying, 'I pay $120 a month for cable service, I watch 5 percent of the channels … what if I could get it directly from CBS or HBO and not have to go thru cable service at all?' That conversation is starting to happen across the board," Thibeault said.
Limelight's findings are somewhat similar to a report released by Parks Associates early this year which said that as many as 7 million U.S. consumers might cancel their pay-TV subscriptions if or when OTT alternatives like HBO Now and Sling TV became available. As with this survey, the answers reflected respondents' intention or willingness to cancel services under certain conditions.
But certain factors are telling: In Limelight's survey, millennials again led the way when it came to cord cutting. Younger millennials watch four to seven hours of online video per week, more than any other demographic. About 20 percent of all respondents subscribe to two or more OTT services like Netflix, indicating "a desire for variety in programming," the report said.
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Number of hours millennials aged 18-25 watch online video. (Source: Limelight State of Online Video Survey) |
It also noted that online video quality can have a detrimental impact on the segment's growth. The majority of the respondents said they will only let a video buffer twice before abandoning it.
So, does this mean pay-TV is all washed up? Hardly, Thibeault said. Rather, the proliferation of OTT services is creating an opportunity for the old guard to retain its subscriber base and maybe even attract cord nevers.
"I think where pay-TV providers have a leg up is one, they're providing more services than just cable. They're offering a package of services," he said. Further, the expansion of TV Everywhere services can help with subscriber retention. "Say I have 15 channels on cable. Sling has five of those, CBS (All Access) has one, Apple TV has the rest. Now I have four subscriptions to get 15 channels, whereas my cable provider, if they can get those 15 to me in a bundle with a TVE overlay and maybe even DVR capabilities, now we're talking about a much more compelling reason for me to stay with cable operator than to cut the cord."
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