jclupis | Marketing Charts | Tue, 12 May 2015 13:30:49 +0000

Deloitte-Pay-TV-Subscription-Preferences-May2014Roughly two-thirds of US adults pay for the majority of the TV content that they watch in their home, according to results from an Irdeto survey [pdf] conducted by YouGov, and two-thirds of those mainly use a monthly subscription service via a cable or satellite provider. While pay-TV continues to enjoy wide penetration albeit gradual subscriber losses, the chorus calling for à-la-carte pricing appears to be growing louder.

Indeed, among the total sample (regardless of their main service type), 58% said they would consider changing their current TV service to a “pick and choose” TV service in the future, with only 1 in 5 saying they would not do so. (The survey defined a “pick and choose” service as one where subscribers could select the specific channels or content accessible to them rather than having a standard bundle of TV channels.)

Not surprisingly, among those that would consider such a service, cost is the main reason, with three-quarters saying they don’t want to pay for lots of channels that they don’t watch, although fewer (53%) said they think it would be cheaper. Among those that would not consider switching, the most common reason cited was liking having lots of channels to choose from (38%), with fewer (20%) feeling that channel bundles offer the best deal.

With recent news items about “skinnier” bundles and standalone streaming offerings, there have been numerous analyses about the cost-effectiveness of à-la-carte packages as opposed to the standard bundle, with some analysts suggesting that paying even for just a few channels could add up quickly. (On that front, 40% of consumers responding to a new Ipsos survey indicated that they would pay up to $10 a month for ESPN, which is suing Verizon for allowing consumers to opt out of its channels for its custom TV offering.)

Nevertheless, recent research from Deloitte [pdf] likewise finds that more consumers want à-la-carte pricing. In its latest study, Deloitte found that 52% of consumers with a pay-TV service would prefer to subscribe only to the channels they watch regularly, as opposed to 40% who would subscribe to a package of channels even if they don’t watch them all and 8% who would prefer to purchase only individual shows and events they want to watch.

That was the first time that a majority had chosen à-la-carte pricing, with the figures essentially flipping from two years earlier, when 50% preferred the bundle and 42% the à-la-carte option.

This may be the results of consumers watching fewer channels: respondents in the latest study reported regularly watching an average of 11 channels, down from 15 a couple of years earlier. (For its part, Nielsen last year reported that despite an increase in the number of available channels, the average US TV household watches 17-18 channels, unchanged since 2008. Other survey data suggests that most TV viewers estimate maxing out at 10 channels.)

As such, consumers appear to be making the calculus that pay-TV (notorious for its low customer satisfaction ratings) is too expensive and would represent greater value if they could choose their channels and presumably pay less. Indeed, some 77% of the Ipsos survey respondents prefer the value of à-la-carte pricing as opposed to tiers of bundled channels.

But buried in the Deloitte report is perhaps the most surprising statistic of them all: so-called Leading Millennials (those aged 26-31) were more likely to consider their pay-TV service a top-3 most valued service than their mobile data plan (75% and 65%, respectively), suggesting that despite all of the changes brewing, pay-TV retains a good deal of value.

While trailing Millennials (14-25) in that report value a host of services over pay-TV, including streaming video, mobile data plans and gaming, the perceived value of pay-TV rises alongside the age of the respondent, almost matching the value of the home internet subscription among the oldest group.

Overall, those results suggest that despite the growing numbers of cord-cutters and “cord-nevers,” most consumers value their pay-TV subscriptions, but just want more value for their money and see that in à-la-carte. After all, in a new survey [pdf] from Limelight Networks, consumers were far more likely to cite increasing prices (38%) as a reason for cutting the cord than the ability to directly subscribe to the channels they want online (16%)…

About the Data: The Irdeto survey was carried out by YouGov Plc from April 20-27, 2015. The sample size in the US was 1,179 adults (18+). The figures were weighted and are representative of all adults (aged 18+) in each country.

The Deloitte survey was fielded by an independent research firm from 11/3/2014-11/19/2014 among 2,076 consumers aged 18+. All data was weighted back to the most recent census data.