According to Parks Associates, consumer perception of a poor value proposition in pay TV remains the top trigger for changing, downgrading, or cancelling services. Among households that have made pay TV changes in past 12 months, one-third of cord cutters and 10% of switchers or cord shavers plan to use paid OTT services as a substitute or alternative for pay TV.
"The primary driver for pay TV cancellation and downgrades continues to revolve around pricing and perceived value. While some consumers consciously plan to use OTT video services to address the absence of pay TV content, most consider each offering on its own merits," said Brett Sappington, Parks' senior director of research. "The deeper issue is in the influence that OTT video services have on what consumers consider to be a 'good' value. When video services with good quality are available for under $15, it forces operators to justify an $80 pay TV bill."
On a related note, research from the Diffusion Group indicates that 35% of Roku users do not subscribe to a legacy pay TV service, compared to 27% of adult broadband users in general, most of which enjoy streaming TV.
"Given its substantial footprint and brand strength, Roku devices are becoming a favorite of those living without legacy pay TV," said Michael Greeson, TDG president. "The assortment of free and fee-based video apps in the Roku portal is undoubtedly a reason why we observe these correlations. For many TV streamers, buying a Roku, and getting access to the Roku video ecosystem, is no longer just an easy way to supplement their legacy pay TV service, but a means of replacing it."
By 2020, TDG forecasts that streaming sticks will near 45% penetration among U.S. broadband households, with iSTBs close behind.
"Should Roku remain the dominant brand and continue to expand its vast OTT content ecosystem," said Greeson, "legacy pay TV will suffer."