How Price-Sensitive Are Cord-Cutters?

Nowadays, everyone talks about the increasing number of people pulling the plug (or "cutting the cord") on traditional television subscription services, in favor of something a little more flexible and cost effective.

Ditching Traditional TV Is Not A Fad

Soaring TV subscription costs certainly play a part in the rise of people deciding to cut the cord. In fact, a brand new survey from Digitalsmiths has uncovered an astonishing fact: 60.7% of U.S. cable subscribers are now paying over $100 per month (including internet and phone, if bundled) for their entertainment package—and things aren’t much different in the UK or Europe.

If more than half of the population are paying an excess of £100 per month for their cable bill, it’s hardly surprising that more and more people are looking for an economical alternative, especially given today’s technology and vast selection of OTT services.

Another big influencer in the big cord cutting decision boils down to the customer service at the traditional cable subscription providers. By and large, these companies train their customer service reps to simply say no to consumer requests, therefore offering little in the way of pricing options or flexibility. A typical conversation might go something like this:

“I’m a loyal customer of five years, I don’t watch over 100 of my current channels; can I revise my pricing plan?”

“Sorry sir, no can do.”

That said, it’s clear that many traditional cable subscribers are looking for economy in terms of viewing options, as well as value for money. People seem to be trimming the fat in terms of what they want to watch and in today’s world, over 100 redundant channels simply won’t do—another reason why people are cutting the cord and taking control of their daily entertainment schedules.

Around 20% more people have cut the cord since December 2014, and it seems this trend is picking up momentum all of the time.

In order to save money and enjoy a little autonomy in their viewing schedules, today’s consumers are ditching their cable subscriptions and relying on a solid broadband connection, plus a hand-picked selection of OTT services such as Netflix, Amazon, and Hulu in order to kick back and get lost in the latest box set, sitcom or movie release—at a fraction of the cost compared to a traditional monthly TV bundle.

Viewers Don’t Mind Paying For Premium Content

As the world migrates to live streaming and OTT services, there is a real chance for people in niche sectors to offer top-quality video content for a premium price. Beyond premium entertainment, appealing content includes business conferences, education/tutorials, worship and spiritual events, and live sports.

These content types provide a lot of scope in terms of offering very exclusive content to a highly engaged, tight-knit community, which means the right people will pay a pretty penny to tune in. And if you get it right, you will gain their loyalty.

Publishers dealing in these types of events and content are also going down the e-ticketing route in order to attract solid crowds. In fact, they’re charging 25–900 Euros for events.

We’ve been digging into our data from live pay-per-view events that our clients did in the past 2 years and found an interesting pattern. Apparently, viewers do not see the price as the key factor affecting the purchasing decision. Publishers that sold tickets for their live streamed shows with prices over 31 EUR recorded the 2nd best (6%) visitor conversion rate (ratio: purchasers/viewers), while the publishers that sold tickets below 5 EUR noted the lowest conversion rate (2%).

Final Note

It seems that while many people are cutting the cord to enjoy their home entertainment for a more reasonable price, they’re also looking for something that fits into their busy modern day lives—and although consumers are looking for value, they will also pay a good price for top-notch, exclusive video content.

[Benedicte Guichard is a senior marketing director at pay-per-view technology provider Cleeng, based in Amsterdam. Streaming Media accepts bylined contributions from vendors based solely on their value to our readers.]

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