• by Jack Loechner , Staff Writer @mp_research, December 19, 2013

According to DigitalSmiths new report on key trends facing the media/entertainment industry today, the Q3 survey findings continue to support a positive trend for Pay-TV providers, showing that only 2.9% of respondents plan to cut their cable/satellite service in the next six months. However, a threat still persists with 6.9% planning to change providers and 2% planning to switch to a third-party app or service.

Cord-thinning, the act of cutting one or more Pay-TV services, is a trend continuing to rise, according to the survey results. Nearly 17% said they decreased or removed services, a relatively significant increase from Q1 2013. Of the services thinned, “reduced level of cable/satellite service” increased the most to 45.2%, with premium channels the highest ranking service cut, though they still remain the top ranked services added, with HBO leading the pack.

Of the 17.2% of consumers who increased their cable/satellite services, premium sports packages saw a huge jump quarter over quarter. There is still huge revenue potential through upselling subscribers, says the report, since 62.7% of respondents do not pay for premium channels and a larger audience does not pay for sports packages.

Overall, satisfaction remained steady at 58.6%, but still far from impressive. Respondents who are unsatisfied rose slightly, totaling 21.5%. When asked about dissatisfaction issues, the top reason was increasing fees while others cited were poor cable/satellite service, poor Internet service and poor customer service. In addition, of those respondents planning to cut, change or switch to other apps/third-party services, 40.4% said they would reconsider staying if their provider released new functionality that made it easier to find something to watch.

Perceived Value Of Service Provider
How would you rate the level of value you are receiving from your cable/satellite service provider?
Very satisfied	19.9%
Satisfied	58.6%
Unsatisfied	21.5%
If unsatisfied, why do you feel you’re not getting enough value from your provider? (choose all that apply)
Poor internet service	28.4%
Poor cable/satellite service	32.5%
Bad channel selection	33.4%
Poor customer service	39.2%
Increasing fees for internet service	40.6%
Increasing fees for cable/satellite service	70.4%
Source: Digitalsmiths, December 2013

There is a significant decrease in the number of consumers watching 3+ hours of TV a day, says the report about TV viewing habits. This quarter, the majority of respondents, just over half, watch 0 to 3 hours of TV a day. Similar to overall TV viewing, consumers are watching less live TV accessed from their channel guide. 54% of respondents watch two hours or fewer of live TV from their channel guide, a decrease quarter over quarter.

In addition, 80.2% of survey respondents watch only 10 channels or fewer. These results demonstrate that much of the content Pay-TV providers pay a premium to offer subscribers is not being leveraged to its greatest potential. In addition, the number of respondents who have difficulty trying to find something to watch grew from 32.5% in Q2 to 36.8% in Q3. All of these stats point to the possibility of a growing dissatisfaction and disengagement by consumers. 

Trend Repitition Do you feel you watch the same channels over and over again?
Quarter	% Saying Yes
Q1 2013	85.5%
Q2 2013	86%
Q3 2013	88.9%
Source: Digitalsmiths, December 2013

 

TV Viewing: On average, how many hours a day do you watch TV?
Hours Watching TV	% of Respondents
<1 hour	6.1%
1-2 hours	2.1%
2-3 hours	25%
3-4 hours	17.6%
4-5 hours	11.8%
5+ hours1	2.8%
Source: Digitalsmiths, December 2013

 

Viewing Live TV: On average, how much of your daily TV watching is of live TV accessed from your channel guide (not DVR’d or recorded shows)?
Hours Accessed	% of Respondents
<1 hour	25.7%
1-2 hours	28.6%
2-3 hours	17.2%
3-4 hours	11.5%
4-5 hours	5.9%
5+ hours	6.6%
Source: Digitalsmiths, December 2013

 

Recorded Shows(On average, how much of your daily TV viewing time is spent watching shows that you have recorded/DVR’d?)
Viewing Time	% of Respondents
<1 hour	46.4%
1-2 hours	27.2%
2-3 hours	12.5%
3-4 hours	4.9%
4-5 hours	2.6%
5+ hours	1.9%
Source: Digitalsmiths, December 2013

 

Channel Surfing(On average, how much time a day do you spend searching or scrolling through the guide looking for something to watch?)
Surfing Time	% of Respondents
<10 minutes	48.5%
10-20 minutes	26.5%
20-30 minutes	10.9%
30-40 minutes	4.6%
40-50 minutes	2.5%
60+ minutes	2.5%
Source: Digitalsmiths, December 2013

 

What To Watch(How often do you know what you’re going to watch when sitting down to watch TV?)
Frequency	% of Respondents
< 10% of the time	7.6%
10% - 20%	5.5%
20% - 30%	6.5%
30% - 40%	5.9%
40% - 50%	11.5%
50% - 60%	11%
60% - 70%	8.4%
70% - 80%	16.6%
80% - 90%	15.3%
90% - 100%	11.8%
Source: Digitalsmiths, December 2013

The future of Pay-TV providers’ VOD revenue is looking somewhat brighter, according to survey results. For the second quarter in a row, respondents are ordering more movies from their Pay-TV provider, with 27% stating s/he orders one or more movies per month. When respondents were asked if it’s easy to find a movie they will enjoy in the VOD catalog provided by their cable/satellite provider, 25.7% said “no,” a slight increase over Q2 2013 survey results.

Pay-TV VOD Purchases Per Month
Rentals	Quarter
	Q1 2013	Q2 2013	Q3 2013
0 rentals	78.5%	73.8%	72.9%
1 rental	10.7%	11.2%	13.3%
2 rentals	5.4%	5.6%	6.7%
3 rentals	2.1%	3.4%	2.7%
Source: Digitalsmiths, December 2013

Consumer rationale for third party services:

• Sixty percent of survey respondents cited convenience as the top reason for using third-party video services. 61.4% of survey respondents who use Redbox Kiosks at retail stores do so because of convenience. This perception contradicts the reality of the cost in time and money of driving to the store, possibly waiting in line, and then having to go back again to return the rental. This is a far greater time investment than simply accessing a VOD title directly from one’s TV
• Second to convenience and a consistent finding quarter over quarter, 48.3% of respondents believe third-party video services are “cheaper,” which clearly demonstrates Pay-TV providers must find a way to offer more competitive pricing to put a stop to this increasing missed revenue opportunity
• The Q3 2013 survey results show an increase to 23.4% of respondents choosing third-party video services due to the ability to watch content on an iPad/tablet. Connected devices are evolving the space in such a way that consumers now want to be able to view video content on multiple connected devices, and outside the home
• “Better selection” responses for third party services increased to 32.9% and “Easier to find what you’re looking for” rose to 30.2% from Q2 2013 survey results

For additional information, please visit DigitalSmiths here.