TiVo TV survey shows future of cord cutting, unbundling and price falls

Another 7.3% of pay TV customers in the US plan to ditch their pay TV service, according to the latest TiVo quarterly report which takes in 3,000 US interviews.

But the report shows a lot more, and it’s free so go download a copy here. It seems to confirm the idea that was being pushed about ten years ago, that channel unbundling is on the way. Funnily enough another report out this week from The Diffusion Group (TDG) suggests that every major US TV network will introduce a direct to consumer OTT service in the next five years.

Our only question is how those who wait 5 years will manage to survive in the meantime?

It looks like consumers are finally going to get what they want, 20 channels of their choice, each subscribed to separately, either as separate apps, but better still under a single search and discovery architecture, totally unbundled and wish they could pay around $1.50 for each of them, and just a little more for the most favorite channels.

While there is a lot more detail in the TiVo report, this raises many questions about the shape of future entertainment groups. They would do well to pour most of their prime assets into top heavy content channels, enriching them substantially, to make sure that their TV channels are among those which consumers actively choose to subscribe to. Over the years it has become common practice to share out the top programs across as many channels as possible and in-fill with reality show dross.

Instead of a group with 12 TV channels, it is better in terms of cost and output, to push content into one channel app, and provide the rest of the past programming as VoD and use the app as an experimental platform to explore new content types. If all the major groups took that advice the US would lose 100s of TV channels and much of the production work on that content. In turn this would free up many experienced program makers to do their own thing and try to sell it, perhaps as a YouTube channel, over the internet, enriching the original content market.

The top lines from the TiVo report said that 9.3% of respondents with a pay TV service switched their providers in the past three months, the biggest churn rate in 2017. Another 7.3% said they would cut their pay TV service in the next 6 months. TiVo calculates that what with people planning to move to rival pay TV providers and those about to cut the cord, as many as 50% of pay TV users could leave their providers in the next 6 months.

And if that’s the case, it is no wonder TDG got the idea that every one of the networks plans its own app, direct to consumers – that must be their only hope of staying alive and avoiding losses.

The TiVo survey showed that 81.3% of respondents said they would like the ability to only pay for the channels they want to watch, when this was dug into deeply, the average ARPU they wished to pay was $33 a month with an average of 22 channels.

The top channels were ABC, Fox, CBS and Discovery, with HBO in 6th place, NBC in 7th and AMC in 10th. Respondents said that some channels were worth more, and when they self-priced these, they came out to HBO being worth $2.58 rather than the average price of $1.50, followed by the movie channels Cinemax and Starz and then Showtime. There were a few sports channels at the tail end of the top ten.

When the debate was held about unbundling some ten years ago, consumers were told that pricing per channel would have to go up significantly towards the $5 mark and beyond and that such a move was impossible. However, the collapse of ad ratings and the rise in skinny bundles suggests that the time has come for unbundling and that there is sufficient consumers market control now to enforce it.

TiVo also asked about those without pay TV and discovered that 85.2% of respondents subscribe (so just 14.8% do not) and around 18.9% of those without it cut services in the last 12 months. The main reason given was price. The second reason is “I have Netflix,” and the third is “I use an antenna to get the basic channels.”

For paying customers, when asked why they might leave pay TV, price comes up once again along with poor service and poor customer service.

TiVo began this survey around the idea of content discovery, so it is no surprise that they asked about it once again, showing that 57% of respondents would like their guide changed to a carousel format of sorted and categorized groups/lists of TV shows and movies. Rather like X1 and most other modern UIs.

In all, some 68.2% of respondents use an SVoD service, up 12.8% over a year ago and around 80% of those have Netflix, 35% Amazon, and 25% Hulu with YouTube TV the 4th player with a significantly higher score than the next big favorite, HBO Now. SVoD subscribers pay between $9 to $14 each month but 13.7% of them spend $25 or more.

Some 93.3% of SVoD subscribers watch content on it every day and half watch 1 to 3 hours a day. TiVo also tracked the devices this was on, but only the Amazon Fire TV had gone up appreciably since it last asked.

The inevitable question about smart speakers had 21.5% of people saying they had one with Amazon Echo and Dot combined reaching 57% market share and Google Home at 35.5% market share. They are used mostly for playing music, general knowledge and for setting timers and reminders.