Survey: Pay-TV providers safe from online video

Fri, 02/05/2010 - 7:45am
Brian Santo

The threat of over-the-top remains minimal and isn’t growing appreciably – at least not yet. Approximately 5.5 million U.S. broadband households are willing to even consider canceling their pay-TV service in favor of free online video.

Service providers should consider that cold comfort, however. The same survey, conducted by Parks Associates, shows that half of those households are willing to switch to a competitor.

Parks doesn’t say this explicitly, but the implications are clear. If viewers can get a better deal for similar programming from a competitive service provider, many will take it. Viewers cannot get a similar range of programming free online because it’s simply not available, so there’s little incentive to cut the cord.

Less than 8 percent of U.S. broadband households are considering ditching their pay-TV service for online video, according to Parks Associates, which published the survey results in a report called “All Eyes on Video.”

It’s possible that broadband households are growing less inclined to switch. A 2008 study by Parks Associates reported 11 percent of U.S. broadband households were considering canceling pay-TV services, and in an earlier 2009 survey, the number was 10 percent.

The willingness to switch might even be less than it seems. Parks Associates reports that those willing to switch “express strong interest in having online access to pay-TV channels (e.g., TV Everywhere, Xfinity).”

Again, though Parks does not say this, the issue might not be switching providers so much as it is gaining more flexible access to content.

Parks does say the phenomenon “highlights an opportunity for traditional pay-TV providers to solidify their base through the deployment of such features. Offline video consumption is also higher. Their median number of DVD rentals from the last six months is 18, compared to two rentals among other households.”

“The threat of cannibalization is real but misunderstood,” said John Barrett, director, research, Parks Associates. “Nobody is going to rely on online video alone. Households likely to cancel their TV services are going to use a mixture of online video, free-to-air broadcasts, and DVDs, including rental services such as Netflix and redbox.”

Offline Video Consumption

That’s all about potential so far. Parks Associates has found few people have actually cut the cord in favor of online video. Only 0.5 percent of broadband households (about 350,000 homes) had pay TV, cancelled it, and now watch five or more hours of online video per week.

“People who have made the switch to online video are few in number, and they don’t watch much TV anyway,” Barrett said.

Another factor in viewers’ lack of interest in online video is that it is still difficult to consolidate and wade through all of the programming options available through so many different delivery mechanisms.

A separate survey from Strategy Analytics concludes that two of the keys to success will be improved content discovery and advanced control devices.

The early adopters of advanced connected TV services, the firm said, value the ability to personalize and share their content but want better control devices and a superior user experience.

More Broadband Direct 2/05/10:
•  Harmonic manages a modest Q4 profit
•  BigBand Networks' Q4 revenue drops
•  Survey: Pay-TV providers safe from online video
•  Verizon adds interactive features in several large markets
•  Active Broadband to demo IPDR solution at Winter Conference
•  Via Licensing, Sisvel report progress on LTE patent pools
•  CTIA, Verizon, U.S. Cellular file against signal boosters
•  Panasonic books Q3 profit on better overseas sales 
•  Corning expects high demand for TV glass
•  SEC drops civil action against ex-Broadcom execs
•  Companies boost productivity and put off hiring
•  Broadband Briefs for 02/05/10



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