Digital TV does not necessarily mean the end of pay-TV services
A new eMarketer report estimates that 158.1 million US internet users will download or stream video at least monthly via any device in 2011, representing 68.2% of web users. By 2015, 76% of internet users will be participating in this trend.
However, this doesn’t necessarily mean they will be stopping their pay-TV service.
“Despite surveys showing consumers’ expressed interest in cutting all pay-TV services, few households actually have done so,” said Lisa E. Phillips, eMarketer senior analyst and author of the new report, “TV Video Viewing: Beyond Cord-Cutters.”
“Cord shaving – downgrading an existing level of service – seems to be gathering some steam, however, and some young adults may never sign up for cable or satellite service when they leave their parents’ household.”
Adweek and Harris Poll found that the top reason for wanting to cut down on cable subscriptions was that viewers could watch what they wanted for free online.
But the reality is a bit more complicated – not all programs are easily available to stream for free, and there are often time constraints. Viewers who want to watch the latest episode of a series on the same night it airs on traditional television will typically not be able to view it online.
However, “marketers must pay attention to where and how those consumes are watching video,” said Phillips. “They may represent a smaller audience, but they are very targetable online.”
Similarly, a new report from ABI Research states that even though there are now increasing numbers of viable over the top (OTT) online video services, cord-cutting is still nowhere near a mainstream activity.
Yet despite finding a failure to date for wholesale rejection of traditional satellite, cable TV and managed IPTV offerings for an OTT service, ABI is warning the pay-TV operators to act now to engage with the concept of online video in a burgeoning connected consumer electronics market that could well gravitate towards the OTT firms.
In its “Technology Barometer: Digital Living 1Q 2011 US Survey Results” study, ABI found that only a tenth of respondents did not subscribe to a pay-TV service.
Furthermore, and despite the received wisdom of many in the industry, ABI discovered a similarly low penetration rate, 11%, of key connected CE devices such as TVs.
Yet even if cord-cutting has not occurred at the rate some had previously thought, changes to consumer behaviour were indeed happening warned the analyst.
It noted that consumers with connected devices were increasingly viewing online content, claiming to watch between seven and eight hours weekly of programming streamed to connected CE devices.
These results highlight the need for pay-TV operators to remain innovative, said ABI practice director Jason Blackwell:
“In a relatively fragmented connected consumer electronics market, the pay-TV package is still the best means to get the widest range of content. In addition some programming such as sports and premium content is still pay-TV centric, even with TV Everywhere initiatives. Now is the time for pay-TV operators to act.
“Currently the services on connected CE platforms are commanded by a few early leaders. Netflix and YouTube, for instance, are the clear consumer favourites for online video, while the divide is even greater for social networking where Facebook captures 97% of social networkers on CE devices compared with 32% for MySpace, the next closest competitor.”