Study Finds: Less Than 8% of U.S. Households Would Consider Canceling Pay-TV Service in Favor of Online Video


Parks Associates All Eyes on Video 2010 Chart

Good news for cable companies. Parks Associates’ All Eyes on Video study finds that the primary threat to the cable/satellite TV business is their traditional competitors — not online video portals or file sharing sites. In fact, the percentage of household who would consider discontinuing TV service in favor of online video only has dropped from 11% in 2008 to 8% in 2010. “The threat of cannibalization is real but misunderstood,” says John Barrett, director of research at Parks Associates. Interestingly, though, Parks Associates found that people who would consider switching to online video content exclusively currently watch around 10 hours of video through their PC or HTPC each week and rent DVDs far more frequently than the norm. However, some of those same people would consider subscribing to a “TV Everywhere” access setup where traditional TV delivery is combined with PC/mobile web browser based remote programming access.

Where do you stand?

I watch about 1-1.5 hours of TV a day, view 5 movie rentals a week, and watch approximately 30 minutes to 1 hour of video online each day. Of course, if I decided to cancel the TV service my online video consumption would jump to, maybe, 2 hours a day. But then there’s the other option of just buying an antenna for free over-the-air local TV access.

Parks Associates finds less than six million U.S. households would consider canceling pay-TV service in favor of online video

Online video not yet a threat to pay TV

February 3, 2010 – Despite the growing amount of video available online, less than 8% of U.S. broadband households are considering canceling their pay-TV services in favor of online video, according to Parks Associates’ All Eyes on Video.

These results from All Eyes on Video are in line with previous Parks Associates studies, which do not show an appreciable likelihood of subscriber churn in favor of online video services. A 2008 study reported 11% of U.S. broadband households were considering canceling pay-TV services, and in an earlier 2009 survey, the number was 10%.

All Eyes on Video found approximately 5.5 million homes would be open to canceling pay TV due in part to the availability of online video. At the same time, one-half of these households are also considering a switch to a new pay-TV provider, indicating the primary threats to companies such as Verizon, Comcast, DirecTV, and Cablevision are still their traditional competitors.

The households likely to switch or cancel their services watch a whopping 10 hours of online video each week, much higher than typical video consumers. They express strong interest in having online access to pay-TV channels (e.g., TV Everywhere), which highlights an opportunity for traditional pay-TV providers to solidify their base through the deployment of such features. Offline video consumption is also higher. Their median number of DVD rentals from the last six months is 18, compared to two rentals among other households.

“The threat of cannibalization is real but misunderstood,” said John Barrett, director, research, Parks Associates. “Nobody is going to rely on online video alone—households likely to cancel their TV services are going to use a mixture of online video, free-to-air broadcasts, and DVDs, including rental services such as Netflix and redbox.”

Barrett also discounted the immediate threat of migration to online video. “Very few households have made the switch, a sign that the alternative is not yet compelling. Just 0.5% of broadband households (350,000 homes) had pay TV, cancelled it, and now watch five or more hours of online video per week. People who have made the switch to online video are few in number, and they don’t watch much TV anyway.”

All Eyes on Video surveyed U.S. and Canadian broadband households to gauge current consumer usage and attitudes for advanced video devices and services. Parks Associates will release results and analysis of the Canadian survey in February 2010.

For more information, visit www.parksassociates.com/video or contact sales@parksassociates.com, 972-490-1113.

About Parks Associates
Parks Associates is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups through market reports, primary studies, consumer research, custom research, workshops, executive conferences, and annual service subscriptions.

The company’s expertise includes new media, digital entertainment and gaming, home networks, Internet and television services, digital health, mobile applications and services, consumer electronics, energy management, and home control systems and security.

Each year, Parks Associates hosts executive thought leadership conferences CONNECTIONS™, with support from the Consumer Electronics Association (CEA®), and CONNECTIONS™ Europe. In addition, Parks Associates produces the online publication Industry Insights in conjunction with the CONNECTIONS™ Conference series.




Tags: , , ,
Filed in: Broadband, Content Providers, Entertainment PCs, Industry Buzz