Nearly 87% of consumers who cut the pay TV cord during the fourth quarter of 2017 did because of price, a 6.6% year-over-year increase and the highest rate of price dissatisfaction to date, according to TiVo’s “Q4 2017 Online Video and Pay TV Trends Report.”
However, pay TV operators are increasingly finding the right solution: a la carte offerings, meeting the average price American consumers want to pay for a package of self-selected channels, which is just under $36 a month, in line with the prices offered by DirecTV NOW, Sling TV and YouTube TV.
“Price continues to drive respondents to cut pay TV service, making TiVo wonder: what actions can pay TV providers take to retain this audience?” the report reads. “Are providers leveraging the necessary subscriber data to identify potential customers at high risk of churn, and are pay TV providers targeting their marketing to this group in effort to combat this action?”
For the third straight quarter, TiVo has found that respondents without pay TV services use their TVs by connecting an antenna for over-the-air transmissions (35%), connecting directly to the internet for apps (30.6%) and by using a separate streaming media device (24%).
For those who haven’t cut the cord, nearly half of respondents said they pay $51 to $100 a month for cable or satellite, and more than 52% of those said they are “satisfied with the service,” while 31.6% said they are “very satisfied with the service.”
“While TiVo understands it is difficult, if not impossible, for pay TV providers to lower the cost of service for existing customers, TiVo believes stronger efforts can be made to educate subscribers on functionality they may not be using — for example, introducing channels and/or valuable content they’re not currently watching, catch-up TV or TV Everywhere offerings,” the report reads. “Targeted, educational marketing powered by real viewer data should be a high priority for all pay TV providers.”
The report relayed that more than 68% of all respondents currently use an SVOD service, up 4.4% year over year, and up nearly 13% since the fourth quarter of 2015. Nearly 70% of respondents with a pay TV service are “cord-cheaters,” or those who have both a cable and satellite service along with one or more SVOD services.
TiVo also found that ownership of both smart speakers and streaming devices is at an all-time high, with 63.5% of respondents having used one or more streaming device. “While smart speaker manufacturers haven’t yet focused on seamlessly integrating live TV into their product, TiVo is confident this functionality is on the horizon,” the report reads. “Pay TV providers must prepare for the battle over the living room. The fight begins when a user asks a smart speaker to ‘find me a romantic comedy’ or presents a similar query — will the smart speaker recommend its own manufacturer’s content, or will it suggest the user’s pay TV content?”
Additionally, TiVo saw nearly 70% of respondents report that it’s easy to find something to watch through their pay TV service, and 85% reporting it’s easy to find something on their SVOD service, both significant jumps in the area of content discovery satisfaction.