With each new survey and analysis about the outlook for cord-trimming and similar media consumption behaviors, the situation becomes more perplexing. At this stage, the best we can expect is "directional" advice - pointing which way the business may be heading, but not specifically defining the scale of changes in viewing activities.
Nonetheless, this week's"Video Trends Report" from Digitalsmiths convincingly demonstrates the urgent issues facing the "Pay-TV, VOD, OTT and Connected Devices" world, as the company defines it. Digitalsmiths' report for the first quarter of 2014 finds that 5.7% of viewers switched providers during the first three months of this year, and 13.5% more plan to "cut" or "change" their current service or jump to an online service during the next six months.
"While these percentages may seem low, multiply this by millions of subscribers and the enormity of the threat to video service providers becomes readily apparent," according to the report from Digitalsmiths, the personalized video search and recommendations subsidiary of TiVo Inc. Almost identical numbers of subscribers increased and decreased their levels of service during the first quarter: 16.2% and 16.3% respectively. The short- and long-term impact of such churn can play havoc with cable economics.
On the positive side, Digitalsmiths found that 64.3% of viewers currently do not subscribe to any premium channels or sports packages. Why is that good news? The company says it represents a "huge opportunity" to upsell to loyal customers "before it's too late."
Digitalsmiths has introduced the term "cord-cheating" to identify audiences that use over-the-top or other third-party services "to meet their entertainment needs." Its survey found that 49.1% of respondents now use OTT services regularly. That suggests that as those services offer more movies, sports and other attractive programming, they will present, in Digitalsmiths' view, "a continuing threat" to existing operators.
The Digitalsmiths study also found that in early 2014, "dissatisfaction among respondents was at its highest, 22.2%, since we started the survey" in 2012. While such griping has become a congenital cable factor, the study fleshes out the reasons consumers are unsatisfied. Not surprisingly "increasing fees" for video was the top reasons (cited by 72.1%) but 30% or more of respondents also picked on poor video and Internet service, "bad channel selections" and poor customer service.
The report is loaded with other data, including use of social media and the paucity of TV Everywhere awareness. Nearly 50% of viewers "don't know" if their video providers offers an app such as TV Everywhere, according to this study. For viewers who use social TV apps, the most popular are those of broadcast TV networks ( ABC 7.7%, NBC 5.7%, CBS 5.6%) although a handful of cable networks reach comparable levels of viewers: WatchESPN at 5.5% and HBOGo 5.2%).
In the self-serving sections of the report, Digitalsmiths - which is fundamentally a provider of program search and discovery tools - identified that 37.9% of respondents "would like to see their pay-TV provider make improvements to the video discovery experience in order to retain them as a customer." Looking ahead, the study found that 52% of viewers would like "mood discovery" tools and nearly 30% already pick shows based on "social media buzz"; that's up from about 20% a year earlier.
Digitalsmiths' study is relatively consistent with the recent Nielsen "State of the Media" report, which shows that viewers watch barely 8% of the channels available to them. And that leads to perhaps the most fundamental - and predictable - finding of the report: 30.1% of viewers are "overwhelmed" by the number of channels available."
"Overwhelmed" may translate into finding new ways to watch the programs that viewers want to see.
Gary Arlen explores the convergence of content and conduit from Arlen Communications <www.Arlencom.com>
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Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.