There is mixed news for pay-TV operators in the Q4 2013 Video Trends Report from Digitalsmiths. On the one hand, the number of people renting movies from VOD systems increased slightly over the previous quarter. On the other, operators continue to struggle to get consumers using TV-Everywhere.
Digitalsmiths new report shows that just under 73% of pay-TV subscribers rent no movies at all from VOD systems. 12.5% rent just 1 movie per month, with 6.1% renting two or more. 17.3% report renting movies from Redbox Kiosks, 8.5% from Amazon and 6.4% from iTunes. Price appears to be a very powerful motivator. The average HD VOD movie rental from a pay-TV operator costs $7, while Redbox charges just $1.60. That appears to be sufficient motivation to continue to get people off the couch and into the car, rather than to rent from their operator.
TV-Everywhere operator apps continue to struggle to find acceptance among pay-TV subscribers. 52.4% do not know if their operator provides an app for their smartphone or iPad, and just 21.6% have actually downloaded it to their device. Worse still, of the people that have downloaded the app, just 30% use it more than once a week. Put another way, just 6% of pay-TV subscribers use a pay-TV operator TV-Everywhere app once a week or more.
That’s a disappointing statistic when consumers clearly have a strong appetite for online content. According to Digitalsmiths, 39% use Netflix and 11.6% use Amazon Prime. Most of these OTT streamers live in homes with a pay-TV subscription, which gives them free access to operator TV-Everywhere apps. Given that both Netflix and Amazon require a subscription, why are consumers preferring online services to pay-TV TV-Everywhere?
The answer is simple: convenience. 59.2% of respondents cite this as a reason for using their preferred OTT service. This despite the fact that the majority have to switch TV inputs and devices to get to apps like Netflix and Amazon.
In the case of movie rentals, price is certainly an issue, with 50% saying the non-pay-TV service is cheaper. The ability to binge view and better selection are also important, with 38.5% and 35.6% citing them as reason to use OTT. Just 13.1% say they use the OTT service because they don’t have pay-TV services.
The convenience factor shows up in other ways in the Digitalsmiths data. The company reports 65% sometimes or always get frustrated trying to watch something on TV. Just 17% say their operator provides recommendations, while 53% say they’d like the TV guide to show them what’s on based on their preference. Of course, preference and recommendations are a key part of OTT services such as Netflix and Hulu.
Why it matters
U.S. pay-TV operators continue to tread water in terms of number of subscribers, while online providers grow strongly.
To return to growth, operators need to make big improvements in usability, convenience and ease of use.
Digitalsmiths data shows the pay-TV industry continues to struggle with these fundamental improvements.