Consumers are still watching a lot of TV, but they way watch it continues to shift from traditional pay TV to over-the-top delivered services fueled by more intuitive interfaces that solidly bring the content consumers might want to watch to the surface, rather than keeping it hidden in the bedrock.
Pay TV providers such as Comcast, with X1, and Charter Communications, with its Spectrum Guide, are elevating their game with fancier, cloud-based user interfaces that provide recommendations that open up those video vaults. But are they doing enough?
Digitalsmiths, the TiVo-owned maker of video search-and-recommendation systems for several pay TV companies, has said it believes providers aren’t using all of the tools and content available to them in a way that will swing the pendulum in their direction.
In a recent trends report, Digitalsmiths tallied responses from 3,150 consumers and found some big gaps between how OTT providers such as Netflix are perceived, compared to more traditional pay TV providers. About 92% of Netflix customers say they’re satisfied with their service, while 76% of pay TV customers have expressed subscriber satisfaction.
Additionally, 78.2% of respondents said subscription OTT services make it easy to find something to watch, followed by 66% who said the same of their provider’s paid video-on-demand catalogs. That figure falls to 58.2% for linear pay TV.
Pay TV operators need to pour more resources into how they manipulate and integrate their treasure trove of content and data, Digitalsmiths suggested, noting that personalized content recommendations drive about 75% of Netflix views. “Pay TV providers have years of data similar to what Netflix is capturing, but the data seems to exist in a diverse number of silos, rather than being integrated, and the data is often difficult to access,” the company said. “Until pay TV providers identify and deploy data-driven, personalized content recommendations, the market will likely see Netflix viewing continue to climb while cord-cutting and cord-cheating continue to increase.”
Though Netflix has a hefty library, its tonnage is dwarfed by traditional pay TV content, which includes a mix of live channels, VOD, premium services and pay-per-view options. The typical pay TV operator has more than 26,000 content offerings available via linear TV; 13,515 free VOD content offerings; 1,551 paid VOD programs (including pay-per-view events); and 11,964 free TV offerings (primarily episodic), according to data from Gracenote.
Digitalsmiths suggests that operators can extract additional value from that content through more personalization and the use of on-screen “carousels” that can present content.
If those efforts are not sped up, pay TV providers, it argued, will face dramatic increases in churn rates or, at the very least, lower average revenue per user as customers downgrade to lower-priced packages, Digitalsmiths warned.