Pay-TV consumers who are turning off service in favor of online video are finding that what’s most attractive is that the nontraditional platforms offer a more flexible experience based on their own preferences—a concept that traditional players have struggled to keep up with.
Take Netflix, one of the largest online video providers.
TiVo revealed in its Q1 2017 Online Video and Pay-TV Trends Report that 57.7% of its subscribers selected the ability for each household member to have their own profile as their top Netflix feature, while 40.7% liked having Netflix make recommendations about content based on previous viewing habits.
The online study was based on a survey of over 3,100 consumers in the United States and Canada.
When it came to looking for something to watch, pay-TV subscribers with access to video recommendations are 15.2% more satisfied than those without them.
Billy Purser, senior director of product marketing for the advanced search & recommendations group at TiVo, said that online video platforms are technically more agile than traditional pay-TV platforms in their ability to test and update user interfaces.
“You’re seeing pay-TV providers a little late to the game with delivering profiles to their subscribers, which allows each member of the household to pick their profile,” Purser said. “For us that was as not as shocking, but we’d like to help the pay-TV providers accelerate some of the development they are doing.”
Purser added that while pay-TV providers “have done a good job rolling out profiles on their mobile devices, the set top box has lagged and that’s the main device of consumption for them.”
Skinny bundle pricing matters
Skinny bundles have also become a greater issue in the video race. They are resonating with consumers who want to slash their monthly pay-TV costs as these offerings allow customers to pick and choose only the channels they want versus having to pay for an all-or-nothing programming package.
TiVo said that 77.3% of respondents to its survey would like to pay for only the channels they watch, a trend that’s up slightly quarter over quarter and year over year.
A number of traditional pay-TV and even insurgent providers like Cincinnati Bell and CenturyLink have indicated they are planning or have an online-based skinny bundle offering. For pay-TV operators, the challenge is that the market has become saturated with various options, making it challenging to provide differentiation over OTT players.
“Every major provider has one in the works or they’re developing one so they’re definitely feeling the threat from the OTT space and all the content that’s out there,” Purser said. “The consumer has more options for any content than they ever had before.”
While the advent of the skinny video bundle is a compelling concept in that it enables users to pick and choose what channels they want, price remains the single sticking issue for consumers. TiVo noted that the average price consumers in the United States and Canada are willing to pay continues to drop.
In the United States, the average price respondents said will pay for the top 20 channels is $28.31, down slightly on a quarterly basis and down 14% over the past two quarters.
Similarly in Canada, the average price respondents will pay for the top 20 channels is $25.56, a decrease of 9.2% quarter over quarter, and 20.1% down over two quarters.
“We’re consistently seeing a drop in what the consumer is willing to pay for the skinny bundles they want,” Purser said. “I think a lot of that has to with the pressure that they’re feeling from the OTT providers.”
New options like Dish Networks’ SlingTV, Playstation Vue and others have enabled users on average to cut their video spend from an average of $100 to $40 a month.
Pursuer said that consumers are starting to seek out skinny bundle options that reflect their user habits and needs.
“If I go to a family birthday party or another event, you’re hearing more and more people saying they’re making the switch or they want an opinion on it, which is good for the consumer,” Purser said.
Sports frustrations continue
Accessing sports content over the top, while a compelling idea, has been a frustrating experience overall for consumers.
TiVo said that 34.3% of respondents are “always” or “sometimes” frustrated when trying to find their favorite team or sporting events in general.
In the first quarter of 2017, 13.5% of the survey respondents said they have watched a live sporting event on a social media network such as Twitter or Facebook. Out of this small group of respondents, the top events watched were from two sports leagues: 48% cited the National Football League (NFL), while another 30.7% cited the National Hockey League (NHL).
“Consumers struggle to find what channel their favorite game is on,” Purser said. “It’s easy with the NFL because it’s only on a few channels, but when you look at pro and college baseball and basketball it can be challenging.”
It appears that sports leagues are starting to make progress with making games available on online video platforms.
In May, Major League Baseball and Facebook carved out a deal that gives the social media provider rights to air live one game per week for a total of 20 games. The deal came shortly after Twitter announced a similar deal with MLB that will allow it to stream one game per week as well.
“It is going to be interesting how the sports league OTT programming efforts shake out,” Purser said. “The sports leagues are being cautious using terms that these are experiments, but they are getting a lot of money to test those, which shows you the streaming guys have a plan.”