In the report Packs Associates said: “Given the growing adoption of OTT video services over the past three years, these figures suggest that adoption of multiple services or expensive services by some consumers is offset by a larger base of consumers who either subscribe to one or two relatively inexpensive services including 30 percent of consumers who do not spend any money on OTT video services.” (Note OTT is an industry term for any service that focuses on cord cutting and streaming.)
So how is this happening? It looks like cord cutters are taking advantage of the fact that they are not under contract allowing them to drop services that go up in price and replace them with cheaper options. Just last week we saw this as many DIRECTV NOW subscribers have started to look for cheaper options after a $10 a month price hike.
“The deluge of OTT platforms has created greater competition for video based on choice and quality of content. Yet as people spend more and more time consuming digital media, OTT platforms are seeing a lag in customers insights, loyalty, and revenue,” said Barry Nolan, Chief Strategy Officer at Swrve. “We believe that by delivering the perfect message at the perfect time, OTT platforms will have a richer and more enduring experience with their customers.”
Now there are some storm clouds as Parks Associates predicts that number may go up as more services like Disney+ try to get you to subscribe alongside your Netflix, Hulu, or Amazon subscription.
“The stability in average household spend belies the activity going on under the surface,” said Brett Sappington, Senior Director of Research, Parks Associates. “2019 may be poised to break that trend. Netflix, Hulu, and Amazon continue to pack on new subscribers. At the same time, services like ESPN+ are also experiencing phenomenal growth, and new offerings from Disney and WarnerMedia are set for release later this summer. One of three things will happen—more households will become OTT streaming households, rival services will begin to pull subscribers away from Netflix, or that spending number will go up. ”
For now, this is all speculation as a growing list of services have failed so far to drive up the average spending for cord cutting in three years. This suggests cord cutters are still very willing to skip new services or drop old ones in order to save money.
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