Sunday, 31 January 2016 12:41

Cable cutting and streaming video – which will win?

By

Most Millennials now use second screens to view content and their parents are cutting Pay TV cable rapidly in favour of streaming video on demand services (SVOD).

These changes are part of the Consumer Technology Association (CTA), ‘2015 Video Consumption Trends’ report that although US based, has ramifications for Australia.

The US is different – most TV content is delivered by cable – Pay TV – hence the frequent reference to ‘cable guys’. Cutting the cable simply means not paying for as many, if at all, pay TV channels and moving to SVOD delivered by the internet connection.

  • 11% have cancelled their service in 2015
  • 27% cited alternate options available at a lower cost
  • 21% have not had a service provider subscription for more than a year
  • 32% said they did not watch enough TV programming to justify the subscription costs
  • 61% say traditional Pay TV providers including cable, satellite and fibre-to-the-home remain the most-used resources for accessing and consuming content
  • 46% now receive content through paid SVOD services (up 7% since 2014)

Read on for content consumption device preferences.

Most (88%) of millennials now use a second screen (tablet/smartphone/computer) to watch video content, the highest percentage of any demographic. They have abandoned the lounge room TV and are mobile, on-the run, anytime, anywhere consumers of both short and long content.

Of their parents (baby boomers) 77% still prefer large screen TV – 80% for screen size, 62% for picture quality - cost is not really an issue.

There is an increasing trend to combine both big and small screens – the latter to access information about the content they’re viewing (50%), watch content on other devices during commercials (48%) and follow social media discussions either related or unrelated to the programming (43%). 71% of Millennials are more likely to do this.

Opinion

In many ways it is a similar debate to the declining PC (desktop) computer market as other devices take over and redefine the term ‘personal computing’.

Only in this case large screen TVs are threatened by tablets, smartphones and more. TVs are dropping in prices and increasing in resolution to 4K (and more) to keep market share but other devices are gradually taking over.

But the real issue comes back to the internet and how it has disrupted everything. Five years ago HD SVOD was not really an option and today you can even get it on a phone.

In Australia Foxtel is estimated to have 2.8M customers and retention has largely been driven by offering lower cost alternatives (A$25-50) to its $100 all-you-can-eat Platinum package. Its churn rate (loss of customers) was about 11% in 2015.

By comparison Netflix has attracted up to 2M customers paying $10-15 per month. Do the math.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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