People are cutting the cord with greater frequency, particularly as the on-demand options from over-the-top providers (such as Netflix and Hulu) begin to gain traction with more consumers. But there are ways for the traditional networks and television providers to fight back.
According to research company Parks Associates, nearly half (44%) of those who initially cut their cords in favor of over-the-top (OTT) services, and then re-subscribed within the past 18 months (about 7% of the pay-TV households), did so because of a promotion offering a discount or better deal than they had before.
“One-half of those who responded said they came back, and they did so because of a promotion or offer,” said John Barrett, director of research at Parks Associates, in a webcast on the findings -- noting that many people who cut the cord did so because of economic factors. “We’re advocating to [pay-TV providers that they] continue to rely on traditional subscriber acquisition tactics.”
While promotions and discounts were the leading factors for re-subscribers for Comcast, Time Warner, DirecTV and Dish Network, consumers who re-opted with AT&T and Verizon cited content availability as well.
Meanwhile, the content providers themselves may want to adopt an “if you can’t beat them, join them approach.” According to a new report from GfK, 42% of consumers in a survey said they thought more highly of TV networks that make their shows freely available on the Internet. At the same time, 34% of consumers said they expect to watch their favorite shows on the device of their choice (a percentage that has nearly doubled since the first time the survey was conducted in 2006). Consumers also admitted that more streaming options means a decline in their “traditional” television viewing.
“Traditional ad-supported TV remains the networks’ biggest revenue source -- so anything on that viewing is a concern,” said David Tice, GfK’s senior vice president in media and entertainment, in a statement. “While greater time spent with TV content is certainly good news, the notion of ‘digital nickels versus analog dollars’ clearly applies. TV networks need to begin to make the underlying value of digital viewers pay off more consistently.”
Similarly, IHS Screen Digest suggests cable operators can increase revenue by providing more options for multiscreen services to better compete with OTT providers. “If a pay-TV operator is facing competition from Netflix, multiscreen represents the first step in fending off the competitive threat,” said Guy Bisson, research director for television at IHS, said in remarks at the IHS PEVE Entertainment 2013 Conference. “By making pay-TV less TV-centric -- i.e., allowing access on tablets laptops and smartphones, and enabling TV to be moved around the house and on the road -- multiscreen becomes an attractive alternative to OTT.”