Tag Archives: OTT Subscriptions

Research Confirms Cord Cutting is Taking a Toll

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We’ve all heard about the cord cutting trend, where consumers are disconnecting pay-TV service in favor of OTT video services. This has implications for CDG clients, both for those who offer traditional pay-TV services, and for those that do not. Some recent research reveals more details about this trend.

Three-quarters of U.S. television households now have pay TV service, but the percentage is continuing to decline, according to Leichtman Research Group, Inc. (LRG).

The percentage of TV households that subscribe to a live pay-TV (cable, satellite, Telco, or Internet-delivered) service is down from 84% in 2014, 87% in 2009, and 81% in 2004, though the amount spent for service has risen 6% since 2016, to a total of $109.60 per month.

According to LRG, mean spending on pay-TV across all households, including non-subscribers, is about $80 per month, slightly less than the 2015 figure.

Among the report’s other findings:

  • Six-in-10 pay-TV subscribers have a bundle of services from a provider – compared to 67% in 2014
  • More than four-fifths (83%) of adults ages 45+ have a pay-TV service – compared to 64% of ages 18-44
  • Nearly nine-in-10 (87%) of households with three or more TVs have a pay-TV service – compared to 75% with two TVs, and 52% with one TV.
  • 54% of TV households have both a pay-TV service and an SVOD service, 21% only have a pay-TV service, 20% only have an SVOD service, and about 5% have neither pay-TV nor SVOD
  • 47% of all TV sets in use have a pay-TV providers’ set-top box – marking the first year since 2010 that set-tops have been connected to less than half of all TVs
  • 27% of TV households have an over-the-air TV antenna – including 53% among pay-TV non-subscribers

 “Three-quarters of households that use a TV currently subscribe to a pay-TV service.  This is similar to the total receiving an SVOD service,” said Bruce Leichtman, Leichtman Research Group, Inc president and principal analyst, in a prepared statement. “With more options for watching live and on-Demand video, consumers are increasingly choosing to cobble together the services that meet the viewing and economic needs of their household.”

More OTT Video Offers are Coming and Consumers Are Spending More on Subscriptions

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Many CDG clients offer video and there are dramatic changes happening to the overall video business. OTT video is disrupting the traditional pay-TV business and subscribers are spending their video dollars differently.

Consumers are embracing subscription OTT services like Netflix, and more are on the way as a result. Subscriptions now account for almost 86% of all spending on over-the-top (OTT) video, up substantially from just over half in 2012, according to an OTT video spending report from Parks Associates.

In a newly announced study, the research firm tracked market trends and profiled OTT video service providers in the US and Canada, including Netflix, HBO, YouTube, and Amazon as well as new services Disney+ (Walt Disney Co.), HBO Max, and Apple TV+.

The new services will prompt consumers to increase spending on internet video and maximize the proportion of spending on subscriptions, the research firm added. The increasing number of new services will also test consumers’ video content expense tolerance. “The amount of money consumers spend per month will spike, at least in the short term, as new services such as Disney+ and Apple TV+ become available. Tradeoff decisions will come later,” said Brett Sappington, Parks Associates senior research director and principal analyst, in a press release “To keep consumers spending at this higher level, services will have to consistently deliver volumes of compelling content within an engaging user experience.”