Our latest poll found the main driver for offering skinny TV bundles was to attract Millennials by delivering TV services on personal devices such as smartphones and tablets. Younger consumers are more likely to cancel or not subscribe to pay-TV services, and they are also most likely to view video on devices other than a TV. (See UK Under-25s Are Guzzling VoD, Finds Ofcom.)
Q: What is the single most important driver for the roll out of slim TV packages, such as Comcast Stream TV, Dish's Sling TV, AT&T's DirecTV Now, etc., by operators?
Source: Telco Transformation, 2016
Respondents were asked "What is the single most important driver for the roll out of slim TV packages, such as Comcast Stream TV, Dish's Sling TV, AT&T's DirecTV Now, etc., by operators?" Almost a third of respondents selected "Offer pay-TV on devices that Millennials prefer," well ahead of any other option.
In the past year, several operators have launched slimmed down pay-TV packages with fewer channels but also at a lower cost. These are invariably streamed to multiple devices rather than just offered via the traditional pay-TV infrastructure. This is largely in response to cord-cutting, which has ramped up significantly in recent years, with Millennials most likely to cut their pay-TV subscription. (See Previous Quarter Was Highest Ever for Cord-Cutting, Say Analysts and Will the 'Slim' TV Business Model Really Retain Cord-Cutters?)
Still, recent research has found that cord-cutters aren't entirely happy with their current services, so operators are looking for ways to retain a relationship with them even when they do subscribe to OTT services. (See Cord-Cutters Can't Get No Satisfaction.)
A sizeable percentage of respondents -- more than one in five -- sees slim packages as a panicked reaction by operators rather than a necessary and practical strategy. This suggests they see cord-cutting (and perhaps even OTT services) as a temporary phenomenon affecting pay-TV subscriptions today, but with limited impact in the longer term.
The same number of respondents (22.86%) felt these services were being offered to target niches that didn't want traditional pay-TV. These respondents believe it's not just about devices and Millennials, there are other reasons why people don't want pay-TV services.
Interestingly, cost didn't figure highly. Less than 15% of respondents selected low discretionary income as a consideration for slim packages. So most of our respondents don't believe that cord-cutting (or at least creating cheaper, slimmer TV packages) is primarily about the money.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation