The analyst firm Cowen conducted a survey June 26-27 with 1,021 respondents participating, and it found that OTT adoption was spiking to a record high because of a convergence of factors, including the streaming wars, work-from-home, and promotional pricing.
According to its survey, 33% of cable and telco OTT subscribers are on promotional pricing that will expire, and that could create substantial churn in the future.
Most cable and telco providers typically launch 12- or 24-month promotional offers with careful analytics, said Cowen. Before a promotion they examine factors such as price elasticity by region, income and credit scores of subscribers and competitive dynamics in a particular footprint. But the current pandemic and recession introduce new factors that could cause surprises.
The Cowen survey shows that 20% of cable and telco subscribers are on internet and/or bundled promotional plans that will expire within the next 12 months; 13% of subscribers are on promotional plans that expire in time frames longer than 12 months; 10% are on price-for-life guarantees; and 57% are on typical non-promotional plans.
“As we look at cable providers, 45% of Altice respondents are on promo plans that will expire, followed by 42% for Comcast, and 32% for Charter,” stated the Cowen report.
The survey also shows that older age cohorts are generally not on promotional plans. But, interestingly, those on promo plans actually have higher bill sizes because these subscribers skew to double/triple play bundles and take faster broadband speeds.
OTT usage spikes
OTT usage has spiked in the past year, according to Cowen, which has been tracking OTT usage from the fourth quarter 2017 to the second quarter 2020. During that time, OTT usage among total respondents has grown from 56% to 76%.
During Q2 2020, it found 79% of cable subs and 77% of telco broadband subs are taking OTT versus 69% and 63%, respectively, in Q2 2019.
The rapid increase is largely attributed to the entrance of new OTT players, spawning the streaming wars; the current pandemic lockdown, and the rise in unemployment as consumers test-drive low-cost and free solutions.
“We note solid OTT adoption levels across all age cohorts, including 61+,” stated Cowen. “Meanwhile Peacock debuted at 4% of all respondents.”
As of Q2 2020, cable subs average 2.65 OTT subscriptions, up from 1.85 subs in Q2 2019, and telco broadband subs average 2.64 OTT subscriptions, up from 1.65 subs in Q2 2019.