x
Heavy Reading Research

IPTV Bogeymen: 2 Down, 1 Still Looms

8:45 PM -- Heavy Reading 's latest research on consumer attitudes toward video services calls into question two widely held beliefs: first, that over-the-top video threatens the success of IPTV, and second, that consumer concern for privacy makes targeted advertising an unlikely source of revenue. (See Google to Give Staff 10% Raise.)

Heavy Reading analyst Adi Kishore told the TelcoTV audience here that his third annual survey of consumers shows that many of the folks who were watching TV online on a regular basis have actually stopped being regular OTT users, a phenomenon he equated with "Facebook fatigue." His numbers show 34.4 percent of consumers surveyed said they regularly watch OTT video in 2009 while only 18.7 percent said so this year.

The number of hardcore OTT viewers -- those who reported watching often -- was up slightly from about 16 percent to about 19 percent, and that group of consumers is what is driving the OTT trend, Kishore says.

But drilling down even further, he found only 2.8 percent of those surveyed had canceled their paid TV service because of their OTT video habits, with 8.7 percent saying they would eventually cancel paid TV for that reason.

More than half of those surveyed didn't see OTT video as competitive with their paid TV offering, and 17 percent said they would always need paid TV.

"What we found was that three-quarters of consumers don't see OTT as a threat to IPTV," Kishore says. "For the next three to five years, at least, OTT is not really a major concern."

On the privacy issue, a surprising 43 percent were "very willing" to share their personal information with a service provider for the express purpose of getting targeted ads -- in exchange for a $10 monthly discount. There were conditions -- the information could not be shared nor sold.

Almost another 40 percent were "somewhat willing" to share their info to save money and get more focused ads.

"Especially in the United States, there is this bogeyman of privacy concerns," Kishore says, that shows up in Internet blogs and regulatory hearings, but may not be based in reality.

There is a bogeyman looming for IPTV providers that is rooted in research, Kishore admits. His numbers show that fewer consumers are changing video service providers and that one factor -- price -- dominates the decision-making of those who do.

That's bad news for newer service providers because advanced services and fancy features aren't proving to be the lure that many had hoped. The low-hanging fruit -- those thoroughly irritated by their cable provider -- has largely been plucked. Going forward, taking customers from cable and satellite will continue to be hard work that will likely require price cuts -- which is not news any IPTV provider wants to hear. — Carol Wilson, Chief Editor, Events, Light Reading

shygye75 12/5/2012 | 4:18:51 PM
re: IPTV Bogeymen: 2 Down, 1 Still Looms

Thanks for the report, Carol. These surveys are good reality checks for the industry. We tend to focus all our attention at the high end of the technology scale; for mass-market consumer services, the action points tend to be at a more practical level. As you suggest, the price issue may not be what video service providers want to hear, but it's what's driving buying patterns in the U.S. consumer market. For the record, the HR survey included responses from more than 500 consumers nationwide. And it's a base that's relatively tech-friendly, since the survey was conducted online. In other words, the results may actually be slightly biased toward advanced services -- and yet the numbers aren't very compelling.

ycurrent 12/5/2012 | 4:18:48 PM
re: IPTV Bogeymen: 2 Down, 1 Still Looms

Broad swipes at the OTT threat tend to focus on the wholesale loss of video subscribers, forgetting that these subs were initially won based on segmented marketing campaigns.  So, OTT will likely present different threats to different subscriber segments.  Easier to defend against a more defined threat.

cnwedit 12/5/2012 | 4:18:47 PM
re: IPTV Bogeymen: 2 Down, 1 Still Looms

Good point, Dennis, about the advanced features. I think the most recent J.D. Power & Associates surveys back up Adi's research - cord-cutting is more about price-sensitivity than love of OTT. People are cutting the cord or cutting back their service to save money during tough times.


At a TelcoTV session I moderated today, a Wisconsin service provider said price isn't what his customers SAY they value most - but churn does tend to happen most often when a competitor is offering some new cut-rate deal.

HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE