May 22, 2009 - Though Over-the-Top video services have yet to "officially" cannibalize or replace traditional PayTV offerings in any significant way, incumbent operators have recently become more convinced of its inevitability. Good thing....
It's hard to break old habits, especially those having to do with home entertainment - we love our music and movies, no doubt, and we're willing to pay for them. In fact, paying a fee for TV service is a monthly habit for more than 80% of U.S. households. This is well-established mainstream behavior that generates tens of billions of dollars in revenue each year for U.S. companies. It is also a business model both protected and regulated by federal, state, and local laws. Breaking into this commoditized space is difficult and costly (just ask Verizon and AT&T, both of which have spent billions and billions arguing their way into the home TV business).
As TDG's research suggests, however, a majority of broadband subscribers are to varying degrees interested in either supplementing or replacing their PayTV services with the right alternate offering. In this Chart of the Week, we analyze the relationship between age and the level of interest in such services. The chart below summarizes our findings.
As highlighted, this simple crosstabulation reveals very interesting differences among the various OTT segments. Just to clarify (even at the risk of repeating myself from prior ChOWs), TDG's most recent consumer study evaluated the extent to which consumers would pay various fees to either supplement or replace their current home TV service. Those likely to supplement but not replace are named "Supplementers"; those likely to replace but not supplement are named "Replacers"; those likely to do either of the two are named "OTT Optimals"; and, finally, those neither likely to replace nor supplement are named "Non-OTT Consumers." Yes, that seems obvious, but it never hurts to make sure everyone is aware of what the terms used actually mean.
So, now the translation:
- Of the six age segments, all but one is led by Non-OTT Consumers. Then again, Non-OTT Consumers account for at most 38% of the any given segment, meaning the vast majority of each consumer segment (and consumers in general) respond positively to the concept.
- At 35 and above, the percent of OTT Optimals declines incrementally as age increases, bottoming out at 25% of those 55 or older.
- Those 25-34 and 35-44 are most likely to respond positively to OTT services. In terms of the youngest segment, 19% are Supplementers, 21% are Replacers, and 29% are OTT Optimals. Among those 35-44, 19% are Supplementers, 21% are Replacers, and 29% are OTT Optimals.
- Those least receptive to either type of OTT service are 55 or older, with 38% falling into the Non-OTT Consumer segment. It is not surprising to find that many of these same consumers have subscribed to their current PayTV service for at least 10 years and demonstrate greater loyalty than younger consumers
This is just a sampling of the data TDG will soon share with Members in an upcoming Consumer Snapshot entitled, Over-the-Top Video Intenders - Profiling an Emerging Consumer Segment. This new report will provide detailed techno-graphic, behavioral, and demographic information regarding three distinct segments of OTT consumers and those with no interest in such a service.
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