Friday, August 26, 2011

Broadband Adoption Linked to Pay TV Downgrades

Consumers categorized as “heavy TV users” are increasingly opting to downgrade their cable, satellite and/or telco TV services within the last year, according to a report from analysts at Parks Associates.

According to the Dallas-based research firm, 13 percent of consumers who have broadband connections have made cutbacks within the last 12 months, with an estimated 9 percent more to come. The 13 percent of consumers includes 3.9 million people who watch Internet videos.

These users reportedly watch TV the most, and spend around $20 or less on monthly video services. The cause for these downgrades includes consumers’ interest in watching more Internet videos as opposed to paying for broadband services. The report did not factor in external influences like unemployment levels.

“Consumers are demanding video content on multiple platforms, and service providers are stepping up to address that demand and stave off cord-cutting,” said Brett Sappington, a senior analyst at Parks Associates. “The technology for delivering and monetizing TV Everywhere continues to grow. The systems are within reach for any operator. The questions are of digital rights, business models, and competitive advantage. The next few years will be important in determining the future of how ‘television’ will be delivered to customers, both today and in the future.”

The study recommends TV providers improve their on-demand video selections, offering a more extensive catalog such as Netflix and Redbox already provide to users. This can be seen in Parks Associates’ report of 22 percent of all broadband households now using Netflix Watch Instantly service.

The research firm also ranked TV providers, with DirecTV coming in first and AT&T coming in second.

From the article, "Broadband Adoption Linked to Pay TV Downgrades" by Lindsey Compton

Next: More than 50% of U.S. Broadband Households want a YouTube on-demand feature with their TV package

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