DALLAS—The average subscriber to standalone pay-TV service spent 10% less from 2016 to 2018, with consumers reporting monthly spending dropping from $84 to $76, according to new research from Parks Associates.
The finding, reported in Parks Associates’ “360 View: Entertainment Services in the US,” illustrates the pricing pressure providers are encountering, resulting in growing conflict in carriage negotiations.
As a consequence, interest among providers in greater vertical and horizontal consolidation continues to grow, according to the research organization.
"Traditional pay-TV providers (MVPDs) have faced continued subscriber losses due to increasing consumer choice from OTT services, so they are deploying skinny bundles and vMVPD services to create more choice among viewers," said Parks Associates President Elizabeth Parks.
Packaged media, such as DVDs and Blu-ray discs, also have felt the sting of changing viewing habits.
Spending on non-pay-TV home video entertainment, as reported by consumers, dropped 30% per month over the past seven years, from its peak in 2014 of $40 to just over $20 last year, said Parks Associates.
Movie theater spending, as well, fell 50% from 2014 to 2018, according to the research group.
The only category to buck the trend was spending on streaming and downloaded internet video entertainment, which has maintained average monthly spending of $8 to $9.
"Subscription online video is the only growth category for consumer-paid video entertainment beyond pay TV,” said Brett Sappington, senior research director and principal analyst at Parks Associates. “Operators, struggling with declining ARPU for standalone pay-TV services, are anxious to leverage this trend."
Leverage takes different forms from operator to operator. Companies like Comcast and DISH are offering subscriptions to third-party OTT video services and integrating them into their discovery interfaces, essentially serving as content aggregators, said Sappington. Others like AT&T and DISH have introduced vMVPD services, he said.
Among the other key findings in the new report:
- 20% of U.S. broadband households have no pay-TV service.
- The Net Promoter Score (NPS) for traditional pay-TV service is weaker than other content types.
- The average number of connected devices per broadband household in 2018—excluding smart home devices—reached 8.4.
- 12% of U.S. broadband households cut the pay-TV cord in 2018.
More information about the report is available on the Parks Associates website.