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Users combining traditional TV with OTT

MUMBAI: Too much emphasis has been placed on the effects of cord-cutting that has yet to materialise on a mass basis and instead users are building their own TV bundles to spend more on TV services than ever, says Ampere Analysis.

ampere pay TV doubling 10 APril 2017In its survey of 53,000 Internet users across Europe and North America, the analyst found, somewhat reassuringly for operators, that far from deserting their pay TV operators through cord-cutting, viewers were more likely to be building on them. Consumers are bringing together services from different providers to build their own perfect TV offer, combining traditional pay TV services with over-the-top (OTT) options. In 2016, over two-fifths built a custom TV bundle, 15 percentage points more than in the previous year.

Image_11417The research also reveals that the proportion of consumers taking pay TV alone across the surveyed markets had declined from 49% of Internet users in Q3 2015 to just 30% at the start of 2017. In addition, the number of homes with on-demand services as their sole subscription television platform has increased in line with the growth in custom SVOD/pay TV combinations.

Ampere found that at the beginning of 2017 it stood at 13%, up from 5% of Internet users in 2015. Many of these homes were supplementing a basic free terrestrial TV offer with SVOD, and some are replacing broadcast TV entirely. The proportion of homes taking just pay TV, or in combination with an SVOD service, remained roughly stable at approximately 70%.

All of this is driving spending. In North America, the average spend on subscription television services — that is SVOD offerings like Netflix, Amazon and Hulu, and cable and satellite TV packages such as Comcast and DirecTV — for 12 months in 2016 was $311. This represents an increase of $30 per person per year from five years ago. Similarly, in Western Europe (where subscription spend is a little lower due to the strength of public broadcasters like the BBC), the average consumer spends $95 per year on subscription television after sales tax – up from $78 five years ago. Ampere says that this trend for doubling-up is not simply restricted to pay -TV and subscription VoD combinations. Households with access to subscription on-demand in Europe and North America are now typically taking between two and three SVOD services each.

Yet there was no room for operators to rest on their laurels, Ampere warned. “The often-predicted mass cord-cutting from pay-TV, driven by the growth of SVOD, has yet to arrive. But let’s not get complacent. There are warning signs. Our research has found that consumers who are doubling-up on their TV services, combining their pay-TV service with one or more SVOD services, are twice as likely to be strongly considering leaving their main TV provider in the next six months. Pay-TV operators must match the ‘watch everywhere’ features of SVOD, and continue to invest in exclusive content if they are to avoid being left behind by more flexible competitors,” noted Ampere Analysis research director Richard Broughton.