What Cord-Cutting? OTT, Multichannel Service is Complementary to Good Old-Fashioned Pay-TV

By Tara Seals March 19, 2014

Television shows are still the most watched type of video, and are a top content choice on alternate screens, according to new research. But the TV set is still the most-used video device, and cord-cutting isn’t happening on a major scale because over-the-top (OTT) services are mostly additive.

A survey from Frank N. Magid Associates and sponsored by Vubiquity found that 83 percent of respondents watching video via TV sets at least weekly and 47 percent are watching daily, but other devices are becoming increasingly popular, especially among those under 35. While younger viewers still use the television set as their primary viewing platform, the study found that three-quarters of under-35s are also using a computer for video viewing at least weekly; 64 percent of 13-17 year olds watch video on a smartphone at least weekly, 37 percent, daily.

“With advances in cloud storage and broad availability of new devices with higher-resolution screens and longer battery life becoming the norm, we expect the appeal of downloading content to portable devices to increase,” the report noted. “We also expect viewing of TV content to increase overall as people access video from multiple devices.  As a result, ARPU and usage trends are making pay-TV subscribers higher-value than ever before, presenting exciting new opportunities for MVPDs.”

Image via Shutterstock.

In fact, a majority of video service subscribers (58 percent) found the ability to download current TV content to a tablet appealing. Sixty-three percent of those also said that they would be willing to pay $1 to $5 to either stream or download content—a big opportunity for operators.  These "downloaders" are watching more content across all platforms when compared to the total sample and are currently paying for a variety of streaming services as well as premium channels. For those who indicated a concern with downloading, device storage and battery life emerged as barriers to entry.

While the research found generational differences in what devices people watched video on most, when it came to content type, TV shows were popular across age groups, with some generational differences.  When asked what they watched most often on tablets and computers, the youngest viewers (13-17 years old) ranked consumer-uploaded content first, and TV shows second. Viewers 18-34 watched TV shows most frequently. One-hour dramas were the most-watched genre.

"We are truly in a new Golden Age of television, where the quality of programming and accessibility to content continue to converge," said Amy Kan, vice president of marketing and communications at Vubiquity. "Today's consumer has more content available to them than ever before, driven by new monetization opportunities for content providers.  In turn, the bigger consumers of video will continue to pay for increased access to content – more content on more devices."

The survey also uncovered that subscriptions to OTT services, such as Amazon Prime and Netflix, are growing, as an adjunct to rather than replacement for traditional Pay-TV services.  While 67 percent of 18-34 year olds report subscribing to OTT services, 80 percent subscribe to a traditional set-top box service. Among 35-49 year olds, 55 percent subscribe to OTT services, while 87 percent have traditional pay-TV subscriptions.

The upshot of the research seems to be that cord-cutting isn't happening on a large scale.  Rather, OTT services are additive, especially for the high-value MVPD customers who are also subscribing to premium channels. These are also the high-value customers that are interested in downloading content to which they subscribe.

“Even with the proliferation of new devices and new services, the television platform still dominates and TV content is most popular,” the report noted. “This trend does not discount the power of new platforms -- they are popular and growing, with the youngest viewers at the head, rather than the tail of the trend. These younger viewers are equally comfortable with a variety of devices and move seamlessly from one to the other, accessing video content from a variety of devices – including the TV screen.”

Edited by Stefania Viscusi

TechZone360 Contributor

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