SHARE

Arturo Gutierrez

We’ve been entertaining the hypothesis that video viewers can and will follow preferred content wherever it goes. Regardless of platform, cable service provider or mobile device, consumers can now comfortably navigate different service providers.

In the not so distant past, consumers were locked into single service providers by geographical boundaries. Entire counties could be serviced only with content from one cable company for a determined amount of time, and if lucky that might include a packaged bundle consisting of an email address (that you never used) and some Wi-Fi enabling equipment. Don’t get us wrong—a bundle is still a wonderful tool for selling services that bring great value to consumers; however, the market has changed so much over the years that the cost savings associated with bundles have become increasingly challenged.

Context

Some insights shared from 451 Research last October made it clear that Pay TV Customers are actively looking for special deals and promotions to switch from their current providers. From skinny tv packages to no equipment or rental fees, a desire to not only tailor but meet a growing demand of needs is persistent in the market for media and entertainment companies. Now, consider these needs alongside the growth of streaming behavior (HBO announced last week that it grew from 2 to 5 million subscribers in the past year), its penetration across all age groups and its pervasiveness in all devices, and it may lead one to wonder if content providers (OTT, TV, Satellite) can not only address consumers’ swiftly changing behavior, but also retain them long-term and mitigate churn.

This got us thinking beyond “why are people switching?” to the following questions:

  1. What has happened in the marketplace that has allowed for switching to occur so easily?
  2. Can customers in a multi-device world with multiple needs be retained long-term?

Today we’ll share our understanding as to changes in the marketplace that have resulted in the shift to switch providers and to do so regularly and readily. We’ll cover long-term retention at a later time, as this will require a more complex analysis.

Moving Pieces

Simply put, the pieces are in place. Cancellation fees and long-term contracts are no longer a barrier for TV viewers to leave one provider for another. Quality content has become ubiquitous, even available as a free add-on through new means (e.g., T-Mobile One and Netflix), and its shortened seasonal nature has become a perfect moment for viewers to jump around from one service to another within short periods of time. In March, a viewer may sign up for an OTT product delivering free Showtime so they can catch the latest season of Billions. Only to cancel their subscription to join HBO NOW in time for the newest season of Ballers. Additionally:

  • Devices like Chromecast and the Amazon TV Fire Stick have become increasingly affordable. In most cases, the cost is less than a month’s cable bill.
  • Internet speed is becoming a bit of a commodity… “it’s fast enough.” Finding an ISP with the fastest internet is no longer a priority, as it’s all fast.
  • It’s questionable where loyalty lies… with the content, or the pipes that provide it?
Net-Net

As traditional barriers to switch, such as price and contracts, continue to disappear and more high-quality content and preferred content becomes accessible across multiple channels, content providers should continue to feel increasingly pressured to not only expand acquisition and engagement programs, but place even more emphasis on win-back strategies.

Customers will leave, but it looks like the market has created an environment in which it’s even easier to come back.

Arturo Gutierrez

SHARE

We’ve been entertaining the hypothesis that video viewers can and will follow preferred content wherever it goes. Regardless of platform, cable service provider or mobile device, consumers can now comfortably navigate different service providers.

In the not so distant past, consumers were locked into single service providers by geographical boundaries. Entire counties could be serviced only with content from one cable company for a determined amount of time, and if lucky that might include a packaged bundle consisting of an email address (that you never used) and some Wi-Fi enabling equipment. Don’t get us wrong—a bundle is still a wonderful tool for selling services that bring great value to consumers; however, the market has changed so much over the years that the cost savings associated with bundles have become increasingly challenged.

Context

Some insights shared from 451 Research last October made it clear that Pay TV Customers are actively looking for special deals and promotions to switch from their current providers. From skinny tv packages to no equipment or rental fees, a desire to not only tailor but meet a growing demand of needs is persistent in the market for media and entertainment companies. Now, consider these needs alongside the growth of streaming behavior (HBO announced last week that it grew from 2 to 5 million subscribers in the past year), its penetration across all age groups and its pervasiveness in all devices, and it may lead one to wonder if content providers (OTT, TV, Satellite) can not only address consumers’ swiftly changing behavior, but also retain them long-term and mitigate churn.

This got us thinking beyond “why are people switching?” to the following questions:

  1. What has happened in the marketplace that has allowed for switching to occur so easily?
  2. Can customers in a multi-device world with multiple needs be retained long-term?

Today we’ll share our understanding as to changes in the marketplace that have resulted in the shift to switch providers and to do so regularly and readily. We’ll cover long-term retention at a later time, as this will require a more complex analysis.

Moving Pieces

Simply put, the pieces are in place. Cancellation fees and long-term contracts are no longer a barrier for TV viewers to leave one provider for another. Quality content has become ubiquitous, even available as a free add-on through new means (e.g., T-Mobile One and Netflix), and its shortened seasonal nature has become a perfect moment for viewers to jump around from one service to another within short periods of time. In March, a viewer may sign up for an OTT product delivering free Showtime so they can catch the latest season of Billions. Only to cancel their subscription to join HBO NOW in time for the newest season of Ballers. Additionally:

  • Devices like Chromecast and the Amazon TV Fire Stick have become increasingly affordable. In most cases, the cost is less than a month’s cable bill.
  • Internet speed is becoming a bit of a commodity… “it’s fast enough.” Finding an ISP with the fastest internet is no longer a priority, as it’s all fast.
  • It’s questionable where loyalty lies… with the content, or the pipes that provide it?
Net-Net

As traditional barriers to switch, such as price and contracts, continue to disappear and more high-quality content and preferred content becomes accessible across multiple channels, content providers should continue to feel increasingly pressured to not only expand acquisition and engagement programs, but place even more emphasis on win-back strategies.

Customers will leave, but it looks like the market has created an environment in which it’s even easier to come back.

Arturo Gutierrez

SHARE

We’ve been entertaining the hypothesis that video viewers can and will follow preferred content wherever it goes. Regardless of platform, cable service provider or mobile device, consumers can now comfortably navigate different service providers.

In the not so distant past, consumers were locked into single service providers by geographical boundaries. Entire counties could be serviced only with content from one cable company for a determined amount of time, and if lucky that might include a packaged bundle consisting of an email address (that you never used) and some Wi-Fi enabling equipment. Don’t get us wrong—a bundle is still a wonderful tool for selling services that bring great value to consumers; however, the market has changed so much over the years that the cost savings associated with bundles have become increasingly challenged.

Context

Some insights shared from 451 Research last October made it clear that Pay TV Customers are actively looking for special deals and promotions to switch from their current providers. From skinny tv packages to no equipment or rental fees, a desire to not only tailor but meet a growing demand of needs is persistent in the market for media and entertainment companies. Now, consider these needs alongside the growth of streaming behavior (HBO announced last week that it grew from 2 to 5 million subscribers in the past year), its penetration across all age groups and its pervasiveness in all devices, and it may lead one to wonder if content providers (OTT, TV, Satellite) can not only address consumers’ swiftly changing behavior, but also retain them long-term and mitigate churn.

This got us thinking beyond “why are people switching?” to the following questions:

  1. What has happened in the marketplace that has allowed for switching to occur so easily?
  2. Can customers in a multi-device world with multiple needs be retained long-term?

Today we’ll share our understanding as to changes in the marketplace that have resulted in the shift to switch providers and to do so regularly and readily. We’ll cover long-term retention at a later time, as this will require a more complex analysis.

Moving Pieces

Simply put, the pieces are in place. Cancellation fees and long-term contracts are no longer a barrier for TV viewers to leave one provider for another. Quality content has become ubiquitous, even available as a free add-on through new means (e.g., T-Mobile One and Netflix), and its shortened seasonal nature has become a perfect moment for viewers to jump around from one service to another within short periods of time. In March, a viewer may sign up for an OTT product delivering free Showtime so they can catch the latest season of Billions. Only to cancel their subscription to join HBO NOW in time for the newest season of Ballers. Additionally:

  • Devices like Chromecast and the Amazon TV Fire Stick have become increasingly affordable. In most cases, the cost is less than a month’s cable bill.
  • Internet speed is becoming a bit of a commodity… “it’s fast enough.” Finding an ISP with the fastest internet is no longer a priority, as it’s all fast.
  • It’s questionable where loyalty lies… with the content, or the pipes that provide it?
Net-Net

As traditional barriers to switch, such as price and contracts, continue to disappear and more high-quality content and preferred content becomes accessible across multiple channels, content providers should continue to feel increasingly pressured to not only expand acquisition and engagement programs, but place even more emphasis on win-back strategies.

Customers will leave, but it looks like the market has created an environment in which it’s even easier to come back.