Cord Cutters Not Returning to Pay TV, TiVo Q4 Study Finds

Price remains key reason for dropping subscriptions
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Cord-cutting activity may have stabilized, but the TV industry needs to stay concerned because people who cancel their pay TV aren’t rushing to plug back in, according to a new report from TiVo.

In its Q4 Online Video and Pay-TV Trends Report, TiVo said consumers still think pay TV is too expensive and would prefer to pick their programming on an a la carte basis. Tivo also looked at new technology, including smart speakers, as potentially creating additional disruption for the current TV ecosystem.

According to its fourth-quarter survey of more than 3,300 consumers, TiVo found that 85.2% subscribed to pay TV. That’s up a bit from a year ago, but TiVo said the increase from 83% was within the study’s margin of error. It also does not include the new virtual multichannel video programming distributors such YouTube TV.

Among respondents without pay TV, the number of people saying they cut their pay-TV service in the past year fell to 18.9% in the fourth quarter, the lowest level in more than a year.

The number of people who say they’ve never had cable or satellite service also dropped to 28.4% from more than 30% a year ago.

But the number of consumers who say it has been longer than 12 months since they had cable or satellite service rose to 52.7% from 48.1% a year ago.

“Are consumers cutting the cord and choosing not to re-subscribe to cable because they’re not missing it? TiVo will continue to track this trend for fluctuations in these two audiences,” TiVo said in the report. "For pay-TV providers, subscriber retention remains crucial—as subscribers once lost may not return."

Related: Pay TV Universe Shrinks to 79% of U.S. Households

The biggest issues causing people to cancel pay TV remains price, the use of streaming services and the use of antennas. More people cited price than a year ago, while fewer mentioned streaming and antennas.

Among pay TV subscribers, those saying they’re very satisfied was up by a whopping 7.5 percentage points year over year to 31.6%. The share of those simply satisfied was down slightly and the share of those proclaiming themselves unsatisfied was down 5.5 percentage points from a year ago and 6.8% over three years.

About half of those pay-TV subscribers could contribute to churn, with 7.3% saying the plan to cut service, 6.5% saying they plan to change pay-TV providers, 5.7% saying they plan to switch to an online service or app, and 29.9% saying “maybe” they’ll make a change.

Consumers overwhelmingly would like to be able to pay only for the channels they want on an a la carte basis, and they’re willing to pay more for that than in the past.

According to TiVo, 81.3% want a la carte, up 4.7 percentage points from a year ago. They’re willing to pay $35.87 for an a la carte package, and are willing to pay $1.50 per channel for an average of 24 channels. The package cost is up 6.2% from last quarter and the per-channel cost is up 5.6%, while the number of channels is flat.

The channels consumers wanted most in their pay TV packages were ABC, Fox, CBS, Discovery, A&E, HBO, NBC, History, Food Network and AMC. The networks they’d pay the most for were HBO, Cinemax, Starz, Showtime, Revolt, Treehouse (in Canada), NHL Network, NFL Network, BET and SEC Network.

According to TiVo, more people are using subscription video-on-demand services, with the most popular services -- Netflix, Amazon Prime and Hulu -- all showing gains. SVOD services also showed gains in how much money consumers spent on them and in time spent viewing.

Related: Netflix Climbs to New All-Time High

YouTube TV, in its first appearance in the survey, was the fourth-most popular OTT service with 8.5% of respondents saying they are subscribers. TiVo noted that the price being charged by YouTube TV and other virtual MVPDs such as DirecTV Now, Sony PlayStation Vue and Hulu Live TV is close to the amount consumers say they want to pay for an a la carte package of programming.

There was also a small increase in the number of people using TV network apps. The most popular apps were for ABC, CNN, HBO and CBS.

On the horizon, TiVo warns that smart speakers such as the Amazon Echo could become a factor in how consumers find TV content.

“Pay-TV providers must prepare for the battle over the living room,” the report said. "The fight begins when a user asks a smart speaker to 'find me a romantic comedy' or presents a similar query — will the smart speaker recommend its own manufacturer’s content, or will it suggest the user’s pay-TV content?"

Consumers are increasingly able to use voice commands to access content, either from their cable remotes or through other digital devices.

TiVo said 24.4% of those surveyed have access to voice search, up 5.2 percentage points from a year ago.

But only 13.9% said they use voice commands to find things to watch. That is up 5.4% from a year ago. The survey found that 39% of consumers were not interested in using voice commands to find content.

TiVo said that as 2017 progressed, sports streaming grew in popularity, and 28.2% of respondents streamed a sporting event. The most popular sites for streaming sports were Facebook, Amazon and NFL.com.

Among heavy sports viewers 77.9% were frustrated when trying to find sports content and very likely to use a smart speaker to check sports scores.

“Broadcast networks should be concerned about the data smart speaker manufacturers can now gather from people checking sports scores as well as the targeted marketing it enables,” the TiVo report said.

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