ADDISON, Texas—The COVID-19 pandemic is resulting in a significant migration of traditional pay-TV customers to virtual MVPD platforms, according to a new report by Parks Associates, including just a little under half of surveyed U.S. broadband households with pay-TV planning to make the switch in the next year.
From its “Growth and Challenges for vMVPDs” report, Parks Associate has found that 43% of U.S. broadband homes that have traditional pay-TV are likely to switch to a vMVPD service within 12 months. During the COVID-19 pandemic, vMVPD services like Hulu + Live TV and YouTube TV have pushed their advantages in pricing, content and platform flexibility to help spur this growth.
The report also found that 17% of vMVPD subscribers had already switched in the previous 12 months. Price was the primary reason, with many saying that their cable or satellite service was too expensive. Other reasons that people cited for switching were some features only being available from an online service; a promotional offer; to watch specific channels; their previous service had too many channels; the cable/satellite service was too unreliable; desire to end contracts and termination fees; or not wanting to deal with required equipment.
Parks says that prior to the pandemic, vMVPD subscriber growth was waning and some vMVPDs were posting continued losses. While the pandemic has helped fuel recent growth, things like vMVPDs recent price increases make it uncertain how consumers will respond long term.
“Subscriber losses in traditional pay-TV continue, while the vMVPD category continues to grow, thanks to consumer price sensitivity and preferences for platform flexibility,” said Paul Erickson, senior analyst, Parks Associates. “Traditional pay-TV operators have online delivery in their roadmaps, if not already deployed. We expect vMVPDs will continue to grow dramatically and will gradually become the dominant offering in the pay-TV landscape.”
“vMVPDs have substantial opportunity if they can avoid the pitfalls that typically drive pay-TV customer dissatisfaction, such as rising prices and inflexible content and platform options. With content prices rising and competition increasing, vMVPDs should remain conscious of consumer price sensitivity while keeping a strict adherence to a consumer-centric experience,” Erickson said.
For more information, visit the Parks Associates website.
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