Pay-TV faces new competition from ‘cord-cheating’

While consumers are both ‘cord-cutting’ and thinning their pay-TV services, an equally large threat is presenting itself, according to Digitalsmiths: ‘cord-cheating’.

Cord-cheating – a phrase coined by the company – refers to the growing trend by consumers to see on-demand content from third party and over the top (OTT) services, as an alternative to their pay-TV provider.

Third party video services include Betflix, Redbox Kiosk and Hulu.

Based on Digitalsmith’s second quarter survey of over 1,850 US consumers, the results reveal that competition facing pay-TV providers is coming from all angles now.

35% of respondents said that they subscribe to an OTT service, 22.1% regularly use a third party pay-per-rental service, and 73.8% have never bought anything from their pay-TV provider’s VOD catalogue.

Digitalsmiths notes that not only is lower engagement a major result of cord-cheating, but it also has an enormous revenue impact – and suggests several key areas that pay-TV providers should concentrate on to regain lost revenue:

• More visible and creative marketing of the Pay-TV provider’s on-demand/VOD options
• Less reliance on the guide and more interaction through new discovery solutions that deliver numerous types of recommendations for all available content.
• More visible promotions for curated playlists of content around various specials or current events.
• Leverage the wealth of viewer behavioral data Pay-TV providers can capture, and utilise it to provide personalised recommendations that are more relevant than those supplied by third-party video services and OTT services.
• Create a strategy that enables more price competitive on-demand offerings.