Huge rise in US pay-TV subs taking streaming
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Editor
| 03 February 2021
The sources of the streaming boom are many and research from Park Associates has identified a sharp increase pay-TV subscribers indicating interest in streaming films and TV shows from an online video service as part of their contracted service.

Parks Appeal Potential New Features 3Feb2021In its study, Pay TV: Perception, Adoption and Retention, Parks found that 60% of pay-TV subscribers, accounting for nearly half of US broadband households, are interested in streaming films and TV shows from an online video service as part of their pay-TV subscription. The firm added that pay-TV providers are responding to this demand, as the number of pay-TV consumers who receive online video services jumped nearly 50% in a year.

Video streaming was shown to be the most popular value-added service among pay-TV households, but there was growing interest for a number of advanced features. Namely, 43% of pay-TV households were interested in having video calls on their TV, while 40% were interested in controlling smart home devices and security systems from the TV. Just over a third (34%) were interested in playing video games on the TV through a cloud gaming service.

The study revealed that Covid-19 dramatically accelerated adoption of online video services, providing a small boost to online-exclusive pay-TV services specifically. The average number of over-the-top (OTT) services among households that have any OTT service was found to be 3.8, while the data showed households with pay-TV services plus at least one OTT service subscribe to 4.2 OTT services, on average. Yet the study also found that at the same time online video grew, cancellation rates for traditional pay-TV accelerated, with millions more cancellations occurring in 2020 compared to 2019.

Parks said that given these trends, the question now was how stable the remaining pay-TV customers are and how to ameliorate cancellations. “If there was ever a time when entertainment service providers believed that OTT was a phase, they are now convinced of its permanence,” said Kristen Hanich, senior analyst, Parks Associates commenting on the Pay TV: Perception, Adoption and Retention report.

“In late 2019, the market reached the crossover point where the same percentage of US broadband households subscribed to an OTT service as subscribed to a pay-TV service, and now OTT adoption outpaces pay TV by double digits. The good news for providers is consumers often have both pay-TV and OTT—79% of pay-TV households have both pay-TV and OTT subscriptions. Providers are in a spot where they must redouble their efforts to engage these subscribers by executing new innovations and business models, or risk accelerating customer losses.”

Going forward, Parks suggested that pay-TV providers must keep offering their most valuable content, which includes live sporting and cultural events. Additionally, it advised operators that they must offer access to streaming, target new service to their interested customers, and perhaps be willing to take a hit on pricing until this chaotic market stabilises.