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Cord-cutting Can be Costly: Average HH Spends $85 a Month on OTT

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(Image credit: ATEME)

ADDISON, Texas—Many consumers who dropped their traditional pay TV services are finding that they can still face some hefty monthly bills for OTT services, with new research from Parks Associates reporting that cord-cutters are spending $85 a month on average for OTT services. 

That is roughly $30 less than what they were paying for pay TV services, according to Park’s "Cutters, Nevers, and the Rebundling of Video" research report. 

The report examines consumer trends in unbundling video services and the recent phenomena of consumers rebundling their service portfolio because of a fragmented video content marketplace.

“Cost concerns drove many consumers away from traditional pay TV, and OTT services are delivering on the promise that they can offer desired video content at a considerably lower price point,” said Elizabeth Parks, president, Parks Associates. “But we find 47% of cord-cutters subscribe to four or more OTT services, so in order to have an optimal video portfolio, they are creating their own video bundles by stacking OTT services.”

Cord-cutters currently spend nearly twice as much monthly on OTT services as cord-nevers, according to Parks. 

It estimates that there are more than six million cord-nevers, US broadband households who have never subscribed to traditional TV who are also less likely to own key streaming video products such as smart TVs and streaming media players. 

By contrast, 58% of cord-cutters own a smart TV, which is roughly equivalent to the national average, so cord-cutters demonstrate an affinity to video content and services that make them a valuable segment for providers to target.

“As they migrate away from traditional pay TV, cord-cutters seek service offerings that more closely meet their video content needs with the added value of flexibility at a lower cost,” Parks said. “OTT services have to continually deliver flexibility and customization at a reasonable cost to keep these subscribers engaged and retain them on an ongoing basis.”

For more information on “Cutters, Nevers, and the Rebundling of Video” report visit www.parksassociates.com.  

George Winslow

George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.