Pay-TV penetration is gradually falling every year from its peak in 2010, and streaming services likely have a large role to play. New data [pdf] from The Hollywood Reporter (THR) and Morning Consult reveals that among people who stopped subscribing to a cable or satellite TV service, the ability to access all the content they wanted through streaming services was one of the leading factors behind their decision, second only to the cost of their pay-TV service.
Traditionally streaming services have tended to be complementary to pay-TV services rather than acting as a replacement, as pay-TV subscribers typically are heavier video consumers than cord-cutters. Yet these latest survey results provide a further sign that streaming services are gaining an edge on pay-TV in the aspects of the experience that are most important to the subscription decision, and are likely then to have a further detrimental impact on pay-TV’s audience in the years to come. This has obvious implications for the ~$70 billion TV advertising industry, which has been overtaken by digital in size in recent years.
How Pay-TV Measures Up – And Doesn’t
The THR and Morning Consult survey asked more than 2,000 US adults which aspects are important to them in their decision to subscribe to a pay-TV or streaming service. It then followed that up by measuring satisfaction rates with pay-TV and streaming services on those same features.
The most important aspect factor for respondents is cost, with 9 in 10 describing this as very or somewhat important to their subscription decision. Unfortunately for pay-TV providers, this is an area where they trail streaming services by a large margin. Just 47% of respondents reported being very or somewhat satisfied with their cable or satellite service’s cost, compared with 79% satisfied with their streaming service’s cost. These results are almost identical to similar research carried out by Hub Entertainment Research earlier this year, in which slightly more than three-quarters of Netflix (78%) and Hulu (76%) subscribers said that their services offered good or excellent value, compared to 46% of traditional pay-TV subscribers.
The importance of pricing explains the shift by traditional pay-TV providers to offering so-called skinny bundles – as well as their rising popularity. Indeed, this latest research indicates that two-thirds of adults feel that TV channel bundles mostly force consumers to pay for channels they don’t want to, as opposed to about one-fifth feeling that the bundles mostly help consumers receive more channels at a lower cost.
Quality Over Quantity; Streaming Wins Both
In an environment where people increasingly favor content over medium, perceptions of content quality are critically important to service subscription decisions.
Almost 9 in 10 of respondents (88%) consider the quality of shows available to be somewhat or very important to their subscription decision, making this the second-leading factor overall. The quality of the shows available is even slightly more important than the amount of shows available (84%). The same is true for movies, with the quality of the available movies (82%) edging the amount of movies available (78%) in importance.
On each count, it’s streaming providers that win out in satisfaction levels. More than 9 in 10 are somewhat or very satisfied with the quality (91%) and amount (92%) of shows available to them, compared with 82% of pay-TV subscribers. The gap is even wider for movies: 88% of streaming service subscribers are satisfied with both the quality and quantity of movies available, compared to 76% of pay-TV subscribers.
This gap is reflected in the results of a new study, which shows that people’s favorite shows are now more likely to be found on Netflix than on live TV.
Where Does Pay-TV Maintain An Edge?
Cable and satellite TV services do have the upper hand on streaming services in a couple of areas. For example, 81% are satisfied with the ability to watch content live on pay-TV, compared to 66% of streaming subscribers. And there are even greater gaps in satisfaction levels for the ability to watch local news (86% and 59%, respectively) and national news (81% and 61%, respectively).
Access to local channels and to live TV have also previously been seen as key differentiators for pay-TV.
The concern for pay-TV providers is that they’re ahead in satisfaction in just 4 of the 17 factors identified. Moreover, just one of those factors in which they have an edge (the ability to watch local news) is in the top half by importance, and barely at that (#8 of 17). Even the ability to watch sporting events – which streaming services have been trying to muscle their way into – is towards the bottom of the factors in terms of importance.
Finally, there’s one other aspect of services for which pay-TV satisfaction is as low as its cost: the amount of commercials. Fewer than half (47%) of pay-TV subscribers are satisfied with the amount of ads. And while this hasn’t seemed to affect service subscriptions yet, pay-TV providers aren’t dialing down their ad loads, either…
The full results are available here [pdf].
