Consumer Pricing Expectations Plummet
A recent survey commissioned by TiVO* found that in Q4 2016, 77% of respondents would only like to pay for the channels they watch, up 3% year-over-year.
The average price the respondents in Q4 2016 would pay per month for the top 20 channels was $28.87, an astonishing 12% decline from last quarter, when they would have paid $32.92.
The respondent’s pricing expectations are in direct contrast to the amount they are currently paying.
The Great Pricing Divide
There is a massive gap between the amount U.S. TV consumers are paying now and what they would like to pay for the top 20 channels.
The largest proportion of PayTV consumers (35%) pays more than $101 per month for traditional pay television. Another 20% pay between $76 and $100 per month.
The second largest group (27%) pay between $51 and $75; and 17% pay less than $50.
Approximately 40% of those polled did not have a PayTV service. The reasons included; too expensive (80%); use of Netflix, Amazon, etc. (48%); use an antenna to get basic channels (27%).
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The Allure of SVOD & PayTV Standalones
Late last year DirecTV Now launched, and Sling TV announced new functionality to improve its offerings.
These new services are offered by satellite providers who are looking to appeal to consumers in two ways. First, by providing a lower-priced, slimmer offering that includes live TV and sports options. And by streaming the service online to exclude the need for a satellite.
DirecTV Now, Sling TV and others are pricing packages between $20 and $35 per month.
Even after supplementing with a mix of Netflix, Amazon, YouTube TV, and HBO GO, a consumer could have access to massive libraries and live viewing options for less than $50 per month.
Google’s Cord Killer?
The days of cable television are numbered after the launch of YouTube TV in the United States.
YouTube TV will cost $35 a month for a family plan and will broadcast at least 40 channels, including ABC, CBS, NBC, Fox, CW, ESPN, USA, Bravo, E, MSNBC, Fox News, Disney Channel, FX and local programming. Showtime and Fox Soccer Plus will also be available at an additional cost.
As broadcast’s traditional market fragments into a myriad of OTT, PayTV, and online options, the winning formula for new participants will be their ability to effectively price content to meet specific demands of large enough niche markets.
*The TiVO report is titled – Q4 2016 Video Trends Report: Consumer Behavior Across Pay-TV, VOD, PPV, OTT, TVE, Streaming Devices and Content Discovery. The survey has been polling over 3,000 media consumers in the United States and Canada every quarter since 2013.