OTT providers eat away at pay-TV VOD revenues
Joseph O'Halloran | 31-01-2014
Even though they have significantly larger numbers than their rivals, pay-TV providers’ video-on-demand (VOD) services are losing their war against streaming services like Netflix, Hulu Plus, and Amazon Prime, says the latest Gfk research.
The How People Use Media: TV Everywhere/VOD report found that more than half (56%) of consumers in homes with cable, satellite, or telco TV service say they use VOD or a TV everywhere offering from their TV provider, and two-fifths of the same group also use a subscription streaming service as supplied by the leading over-the-top (OTT) suppliers.
In terms of basic popularity, streaming services rated better than VOD by 44% of those who use both. Just over a quarter (27%) preferred VOD, and 29% say the two are equal. That said, among users of both service types who turn to VOD at least once a week, on-demand is preferred by 43% versus 30% for streaming services.
Similarly, Gfk found perceptions of the “variety and choice” of programming available via VOD are “dramatically more favourable” among those who use it more frequently. Among the once-a-week-plus user group, VOD is perceived as essentially equal to Netflix and similar services in terms of viewing choices; 57% cite VOD as having excellent or very good variety, compared with 55% for paid streaming. Those who use VOD less than once a week see the streaming services as highly superior in choice by a huge margin of 67% versus 28%.
TV everywhere is rapidly becoming an important tool for pay-TV providers to avoid churn with 28% of such users feeling more satisfied with their pay-TV service, up from 24% in January 2013, and a third were less likely to change pay-TV providers, up from 25% a year ago. Somewhat counter intuitively, just over a third (35%) of subscription streaming service users, who would be perceived as the classic cord-cutting audience, are more satisfied with their pay-TV service, and 39% say they are less likely to change providers.
“Pay-TV providers are getting sampling for their VOD services – but they need to gain repeat users to start winning the perception battle,” said David Tice, senior vice president of GfK Media and Entertainment. “Consumers are open to considering alternatives to Netflix; but a lack of education and of effective marketing are letting these key pay-TV assets languish in the shadows.”