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Pay-TV Subs Aren't Buying Into VoD

Mari Silbey
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Pay-TV providers have made enormous strides with video on demand in recent years, but that doesn't mean consumers are willing to pony up the cash for VoD titles that aren't free. In the latest survey results from the Digitalsmiths Corp. "Video Discovery Trends Report," a whopping 72.9% of respondents reported that they never purchase content from the VoD menu. In contrast, 41.7% pay a monthly fee to Netflix for on-demand content, and 48.2% say they use some kind of subscription over-the-top service.

The good news for pay-TV providers is that subscribers appear much more likely to supplement their monthly TV bill with an OTT service rather than rely on the web for everything. The bad news, however, is that providers are still losing revenue to competitors on the VoD front. Digitalsmiths calls the consumer behavior "cord-cheating," and says the trend continues to grow.

Viewers cite several reasons for using OTT services. The top ones include convenience (60.1%), cost (48.3%), and the "ability to watch certain TV shows and whole seasons" (42.6%). On that last point, the cable industry is trying to fix its own back-catalog problem. Programmers want revenue from the ads that run in VoD shows outside the C3 window. If Comcast Corp. (Nasdaq: CMCSA, CMCSK) and The Nielsen Co. can solve that problem -- as they're currently attempting to do -- providers will be much more likely to include whole seasons of shows in their VoD guides. (See Comcast Seeks VoD Killer App.)

The latest quarterly report from Digitalsmiths is chock-full of other statistics on pay-TV viewing habits. Of note, only 19.6% of respondents said they have a pay-TV provider's TV Everywhere app on a mobile device. Also, almost nobody surveyed reported using a specific social TV app. However, 30.8% said they choose to watch TV and movie content based on social media buzz.

— Mari Silbey, special to Light Reading Cable

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User Rank: Light Sabre
12/11/2013 | 12:58:42 AM
Re: But why not just talk about pricing?
Agree with others that pricing, horrid user interface and the general problem that a given episode of a show may or may not be available at any given time are largely responsible here.

One way to look at this more carefully though would be to compare something more like VOD that is delivered OTT, like say Vudu or Apple TV or Google Play or some combination of the above.  I bet that even if you added all of these together they wouldn't add up to the same numbers as cable VOD. 

Netflix is unique here.  The all you can eat buffet Netflix offers is the clear winner.  The obvious comparison to Netflix is, what, StreamPix?  Has anybody even heard of StreamPix?
User Rank: Light Beer
12/5/2013 | 5:47:01 PM
Lack of VOD use by pay TV subscribers.
The cost is the number one reason for the families I know who do not use VOD from their pay TV provider. For those who have no affordable internet service, you can be stuck with the VOD of DirecTV or DishNetwork satellite pay TV service. Very unaffordable.  
User Rank: Light Sabre
12/5/2013 | 10:15:16 AM
Re: But why not just talk about pricing?
The posters below are dead on. Price and clunky GUIs deter most users who already feel they're paying way too much for cable TV services. You have users annoyed at bi-annual rate hikes refusing on principle to overpay for yet more content. Charter's CEO all but came out recently and openly stated their video product wasn't very good right now. Also, again, I don't think the cable industry has realized that they are, whether they like it or not, competing with no-cost, no restrictions piracy.
Benoit Mercier
Benoit Mercier,
User Rank: Light Weight
12/5/2013 | 7:51:20 AM
Re: But why not just talk about pricing?
Poor user experience has always been an issue, it's slow and cumbersome to navigate through the VOD menu. Combine that with the high cost vs Netflix (try $5.99 for a new HD VOD release in Canada), it's a no-brainer against VOD.
User Rank: Blogger
12/4/2013 | 11:00:45 PM
Does this mean the social TV revolution has fallen flat? The sector seemed like it was trying to encourage and leverage this movement through new apps and interface designs, and there was a lot of start-up activity, too.
User Rank: Light Sabre
12/4/2013 | 1:21:46 PM
Binge watch model driven by Netflix has proven to be very successful. That combined with pricing is a key advantage of OTT offering over traditional pay-tv.
User Rank: Light Sabre
12/4/2013 | 12:50:58 PM
But why not just talk about pricing?

So, most of the time a VOD HD movie that is new is $4.99.  I pay $8 for my Netflix sub.  So, VOD needs to rethink the pricing model to get my dollars.  50% of the new release cost is just WAY to high.

I think the reason for poor usage is just that simple.  If I have decided I can wait the time from theatre release to VOD availability then the essentially "free" 30 - 60 days until it hits Netflix just doesn't matter.


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