Strategy Analytics: A La Carte Pricing Could Help Pay-TV Providers

  • Online Video
  • VoD
BOSTON, MA - Collectively, US pay-TV providers lost 400,000 subscribers in the second quarter, their worst period in more than three years. Cable TV took the brunt of the hit, though satellite operators were not left unscathed. Although “deal seekers” looking for cheaper prices accounted for much of the churn, the percentage of those who say they’re giving up on pay TV altogether continues to grow.

Those cord-cutters are not the low-value, low-revenue fringe customers they have been made out to be, according to new survey research published by Strategy Analytics. Rather, they are consumers who place a high value on content. They are three times more likely to report watching paid VoD than traditional economically motivated churners.

“The pay-TV industry has gotten it wrong on the topic of cord cutting,” says Ben Piper, director of the Strategy Analytics Multiplay Market Dynamics service and author of the report. “For the second consecutive year, our survey research clearly indicates that those who intend to cut the cord are high-value, high-revenue customers, not the deadbeats they have been made out to be.”

An Opportunity for Service Providers
If cord cutters are motivated less by price and more by control of content, Strategy Analytics concludes, service providers should view this as an opportunity.

“Forty percent of cord cutters, compared to 20 percent of economic churners, said they would be willing to pay more than they currently do for pay TV if it meant they could pick and choose content on an à la carte basis,” notes Piper. “Pay-TV providers should view this as an opportunity to customize and repackage content offerings to this growing segment.”

The report, which draws upon survey work fielded in Q311 of 2,000 U.S. households, provides detailed profiles of each segment as well as insights into their churn motivations and their attitudes and opinions towards content.

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