Two-thirds (68%) of US TV viewers subscribe to one of the big 3 subscription video on demand (SVOD) platforms, up from 49% in 2014, according to a new report from Hub Entertainment Research entitled “What’s TV Worth” [excerpt download page]. The study, based on a survey of 2,296 people ages 16-74 who watch at least an hour of TV a week and have broadband at home, also finds that pay-TV penetration has declined significantly in the past year.
This year more respondents have a pay-TV subscription than pay for one of the big 3 SVOD services. But the 78% with a pay-TV service represents a considerable decline from last year, when 88% reported having one.
One reason why these platforms may be trending in opposite directions? Value.
The survey found that users of SVOD platforms are highly satisfied with the value they derive from their subscriptions. Fully three-quarters of Netflix (78%), Hulu (76%) and Amazon Prime (75%) users associate either excellent or good value to the platforms.
By contrast, fewer than half of traditional pay-TV users ascribe that level of value to their subscription.
The most common complaint with pay-TV’s value has long been its cost, although difficulty with content discovery is also a secondary factor.
It’s worth noting that pay-TV subscribers using authenticated TV Everywhere sites and apps ascribe a greater level of value to their pay-TV service (54%) than do those not using TV Everywhere (38%). (Estimates indicate that about one-third of pay-TV subscribers access their providers’ TV Everywhere offerings.)
Virtual multichannel video programming distributors (VMPDs) – commonly known as skinny bundles – sit somewhere in between traditional pay-TV and SVOD platforms in terms of their perceived value. About two-thirds (68%) of subscribers say these skinny bundles offer them good or excellent value.
Pay-TV Subscribers Watch the Most TV
Regardless of the value they derive from their services, pay-TV subscribers spend plenty of time using them.
As part of the study, Hub Entertainment Research compared various characteristics of the traditional pay-TV subscriber, cord-cutter (those who stopped paying for traditional TV), cord-never (those who have never had a pay-TV subscription), and VMVPD subscriber populations.
The results indicate that pay-TV subscribers are the oldest on average (42), with cord-cutters (40) and cord-nevers (36) slightly younger. Interestingly, virtual MVPD subscribers are the youngest, with an average age of just 32.
That tracks with a recent study from Leichtman Research Group, which found that 18-34-year-olds represent a majority (53%) of adults in the US who have a live streaming Internet-delivered pay-TV service such as Sling TV or DIRECTV NOW. Overall, 11% of adults ages 18-44 reported subscribing to such a service, versus just 3% of those ages 45 and older.
Meanwhile, pay-TV subscribers surveyed by Hub Entertainment Research reported spending the most time watching TV per week, at 21 hours. That was higher than both cord-cutters and VMVPD subscribers (17 hours each), with cord-nevers watching the least (15 hours per week). Separate research has also found that cord-cutters tend to be lighter TV consumers than pay-TV subscribers.
In fact, just 40% of cord-cutters describe TV as being very important or essential to them, as do only 35% of cord-nevers. By contrast, a majority (53%) of pay-TV subscribers consider TV to be very important or essential, as do an impressive 65% of VMVPD subscribers.
An excerpt from the full study can be downloaded here.