A La Carte TV Service Gains Momentum
- by Wayne Friedman , June 17, 2015
For TV consumers, the ideal new digital a la carte TV service isn’t getting hundreds of traditional TV channels -- more like a dozen and a half. A new first quarter 2015 survey from TV search company Digitalsmiths, a TiVo-owned unit, says consumers ideally want a package of 17 channels, with the ideal monthly price of $38.
Research -- based on more than 3,140 consumers -- says that 81.6% were interested in a la carte services that can be bought outside the traditional pay TV bundle. Top networks from the survey to be included are ABC, Discovery Channel, CBS, NBC and the History Channel.
Many new over-the-top (OTT) digital services that have started up -- or will be -- are establishing so-called “skinny” TV packages of 30 channels or less -- much fewer than the hundreds of channels most pay TV consumers get from traditional pay TV providers.
Digitalsmiths' survey says more than half of those surveyed – 55.7% -- were aware of OTT services, such as CBS All Access, Hulu, PlayStation Vue and Sling TV. The majority were aware of Hulu 51%; then comes Sling TV, 11.9%; PlayStation Vue, 11.4%; and CBS All Access, 10.5%.
There is some movement among TV consumers to change from traditional pay TV services: 7.7% of respondents switched providers in the last three months, a 2% increase versus a year ago. Still, in the first quarter 2015, 92.3% didn’t change pay TV services.
Over the next six months, 15.3% of respondents they plan to either switch, change, or cut service altogether.
The problem with this is that these folks will discover that the "ideal" monthly price for subscribing to their 17 unbundled channels will be a lot, lot, lot, higher than $38. Then what, cut back to 4 channels? Or fork up the extra cash?
I agree with Ed. It's a downward spiral. Reduced HH penetration = reduced audience = reduced ad rates = reduced investment in programing = fewer channels worth watching.
"Fewer Channels Worth Watching"? People are "Cutting the Cord" and seeking their entertainment and informational needs via other (and cheaper) sources. Among the reasons people are discontinuing their service include too much money, and the beyond insane amounts of advertising crammed into shows. Not only are the other sources cheaper, but they have little, if any advertising. They have better things to do than watch 20 or more commercials per hour.
@William, it's not that there are fewer channels worth watching but that fewer of the newer cable channels are worth watching. We still tune in about the same number of channels as before over a reasonably short period ---not less. Also, the amount of time we spend with those channels we watch has held fairly steadily at about 2.3-2.4 hours per channel, per week for the last 15 years.
As regards the presumed antipathy of consumers towards advertising, this is a common complaint in all of the polls. People just love to bash TV commercials--and online ads too---in such surveys and, no doubt, some of them are actually chronic ad avoiders. But most aren't. As a matter of fact many sectors of the population are ad receptive. They find many commercials entertaining, they learn about new products from them, etc.
But let's assume that large numbers of viewers are becoming enraged at the increasing ad clutter on TV ---and it is increasing, somewhat----to the point where they are zapping the ads like never before or rushing out of the room every time a break appears, or tweeting their heads off, or who knows what---just to avoid those obnoxious commercials. Shouldn't this "revolt" be reflected in the commercial recall studies. If the normative recall level, per Nielsen's "Brand Effect studies, was 45% 9-10 years ago, shouldn't it have dropped to, say, 35% by now----or maybe even lower? I wonder if someone at Nielsen is tracking this and would care to tell us what the long term trend actually is?
My basic point is that cord cutting is not sweeping the nation, as some assume. Rather, it's a solution-----for some people ----who dont have the cash to subscribe to cable or a satellite distribution service or even, to maintain a TV set---that may well be reversed, depending on changing conditions. In fact, as many have noted, young cord cutters, who are very mobile residence-wise, often cut the cord at their old home or appartment when they leave and don't sign up as quickly when they are relocated. Also, many people, who are strapped, financially, shop around for TV access services, looking for a better deal---the ensuing "churn" beefs up the cord cutting stats.
There is one event (That's held on the first Sunday of February) where people actually LOOK FORWARD to seeing commercials on TV. The next day, USA Today will publish what commercials were the most popular, But there is a problem. Most of those ads ARE NEVER SEEN AGAIN, while the least popular ads are shown again and again and again. I'm sure you,ve heard the phraise "You can attract more flies with honey than you can with vinegar. I have a solution for advertisers, LAY OFF THE VINEGAR! There will be icycles in Gehenna before I'll partake in a business who's commercials insult me. On the other hand make a commercial that has me ROTFLMAO, or presented to me in a manner that's informative and pleasant, and I'll eat out of their hands.
Always love research that claims "we know what consumers want". Consumer do not know how to understand and project the trade-offs. Will they agree to this "deal" the research claims if it means lower quality entertainment (which it would)? Would they agree to this deal if it means more and more re-runs (which is also possible)? Would they agree to this deal if they had a realistic understanding of how they use TV (because most people don't know what they actually do - they keep a skewed perspective in mind)?
This research is pretty shaky. But it's interesting that too many INDUSTRY people seem to hate their own work so much that they suck this stuff up like mother's milk never questioning it's underlying validity. Why is it ad agencies that argue most loudly that there's too much advertising? Or TV specialists who argue that "all TV must change"?