BOSTON – While cheaper ‘skinny’ TV packages may attract elusive younger consumers to pay TV, they also risk cannibalizing the traditional TV business as older subscribers downgrade their packages in an effort to cut costs, says a new U.S. survey.
Altman Vilandrie & Company’s seventh annual consumer video survey found that nearly 70% of non-subscribing 18-24 year olds agree that they would consider subscribing to pay TV if there were “more affordable channel lineups that fit my viewing tastes.” These young consumers, who subscribe at much lower rates than other age segments, include both ‘cord cutters’, who have dropped pay TV, and ‘cord nevers’, who have never subscribed.
But these slimmed-down packages may end up attracting older consumers disproportionately: 63% of pay TV subscribers aged 55 and older agree that they are “wasting money because my pay TV service includes many TV channels that my household does not watch”. This age group is far less likely to switch to online video services – only 30% watch TV shows or movies online weekly – but may end up downsizing to skinny bundles that include traditional pay TV channels, continues the survey.
“The surprising level of dissatisfaction with unwanted channels we found among older subscribers shows the difficult balancing act skinny bundles create for pay TV providers,” said Jonathan Hurd, the Altman Vilandrie & Company director who led the survey project. “It is critical for providers to design optimal bundles that maximize adoption of new subscribers while simultaneously limiting appeal to existing customers – no small task, based on simulations we've run using the survey findings.”
The survey also confirmed that young consumers turn to more economical online video options rather than traditional pay TV. Some 75% of 18-34-year-olds report watching online video from Netflix, Amazon Prime, or Hulu Plus at least once per week, far more than the 22% of consumers age 55 and above. And the trend among younger consumers toward online sources continues to grow, with nearly 80% of 18-24-year-olds watching TV shows or movies on the Internet in a typical week, up from 60% five years ago.
The survey also analyzed pay TV subscribership, online video usage, mobile viewing, multitasking, and TV Everywhere awareness and usage. Other findings include:
– Channel surfers: Further highlighting age-related differences, when respondents do not “have a plan” of what to watch, 60% of 18-24-year-olds say they are more likely to turn to online video sources like Netflix and Amazon, while 87% of those age 55+ turn to traditional TV;
– Sharing economy: 13% of online video consumer respondents “borrow” the account of someone outside their household for at least one paid online video service, and only 38% of these account borrowers report being likely to subscribe to their own account within the next year;
– TV Everywhere still nowhere: Subscribers’ awareness of TV Everywhere – the ability to watch programming, generally for free, from their pay TV provider on devices other than a TV (mobile phone, tablet) – remains low at 36%, unchanged since 2013;
– Cable or broadcast?: Younger consumers are less likely than older consumers to know whether channels are broadcast or cable. For example, only about a third of 18-24-year-olds know that ESPN, USA, and AMC are not broadcast channels.
Altman Vilandrie & Company fielded the online survey in July 2016 to more than 5,000 respondents provided by Survey Sampling International.
