Nagra Study: Different TV Viewers Have Different Needs

A new study from content protection and multiscreen TV solutions company Nagra and U.K.-based TV industry research firm Ampere Analysis offers up both good and bad news for operators: younger consumers will freely pay for their content if they can get it on demand, but they’re also the most likely to ditch your service at the drop of a hat.

The study — “Television Tribes” — sees global pay TV households levelling off around 1 billion worldwide by 2020, but also predicts OTT subscribers hitting roughly 550 million households at the same time. By 2022, subscription OTT will have hit nearly 600 million, with traditional pay TV remaining stagnant.

And both pay TV providers and OTT operators are tasked with catching the same consumers, which the study identifies as “Content Connoisseurs,” who are the most demanding in terms of the content they want and where they view it, are young, have money to spend, and account for nearly 25% of the market. They spend, today, $70 a month on services … and they’re fickle: nearly 30% said they’ve changed their pay TV provider in the past six months, nearly double the churn rate of any other group.

The “Content Connoisseurs” account for nearly a third of all cord-cutters or cord-nevers, and nearly 80& said they prefer online video platforms as their main source of content.

“As the distinction between conventional pay TV and OTT services blurs, understanding these TV tribes, which ones are the most valuable, and keeping them happy with compelling content, experiences and technology, is the first step for operators to unlock new opportunities and remain relevant in a new pay TV era,” said Ivan Verbesselt, SVP of group marketing for Nagra. “A one-size-fits-all strategy will not maximize value. Meeting the needs of distinct segments of consumers is the key to attracting and retaining subscribers, and growing revenue.

“The successful operators of the future will be those who accelerate their transition to IP to gain more flexibility and meet evolving and diverse content consumption needs, enabling tech-savvy consumers to create their own next-generation bundle of TV and on-demand services.”

For traditional pay TV operators, the name of the game, when it comes to staying in business, is to keep the sports coming. That’s what the group identified as “TV Traditionalists” (middle aged, linear TV preference) in the study are most likely to want in order to keep shelling out for a monthly cable or satellite service. They represent about 18% of the market, and only 9% said they’ve switched their service in the last six months.

The other groups include “Super Spenders,” who freely pay for every bundle and premium channels; “Broadcast Bingers,” the low-spenders who binge-watch via set-tops; and the “Digitally Detached,” the older generation who are hard to reach, are pretty set in their ways, and don’t need much in the way of catering to, according to the study.

It’s those first two groups that need special attention, according to Guy Bisson, research director of Ampere Analysis. “The future is not about running from changes in the pay TV market, but embracing them. Successful operators realize that the world of paid content has moved beyond the simplicity of relying only on sports and Hollywood movies to drive subscription and into a business environment characterized by shades of grey,” he said. “To succeed, operators must understand the very different demands of today’s consumers and continue to give them what they want by embracing the opportunities offered by streaming services and content.”