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Cable Technology Feature Article

June 04, 2013

Consumers Have No Preference When it Comes to Pay-TV vs OTT

By Tara Seals, TMCnet Contributor

There’s no real difference in terms of where consumers choose to source their online video content, new research has revealed. A survey on key consumer decision points for choosing a digital content provider from back-office specialist CSG Systems (News - Alert) found that consumers are just as happy buying digital movies and TV series via over-the-top (OTT) providers as they are with broadband pay-TV operators.

To wit, 71 percent of consumers are willing to buy content from OTT providers, while 70 percent are just as willing to buy from their pay-TV provider.

“With so much publicity around the evolution of digital content, it’s easy to assume that over-the-top newcomers are winning the battle to attract consumers and revenues from pay-TV providers, but that is not necessarily true,” said Kent Steffen, president of content direct at CSG International.“Consumers are less focused on the type of provider and are making decisions based on the experience of the digital content purchase around factors such as cost, quality and ease of use.”

The survey also however found that pay-TV providers have a bit of an ace in the hole: nearly 71 percent of respondents want digital content charges billed through their cable, satellite or IPTV (News - Alert) operator.

“In the competition for market share, this gives pay-TV providers a significant opportunity to leverage an easy, convenient way of paying for digital content through their existing billing relationship with the consumer,” CSG noted.

When consumers make content purchasing decisions, five key factors guide their decision-making: price, ease of use, viewing quality, availability across platforms and the provider offering the content. And, age is a key indicator of consumption.

More than 35 percent of all consumers indicated that price of content is the single largest influencer on the decision to purchase content. Price sensitivity grows as the age of the consumer decreases. For example, more than 40 percent of 18-year-olds to 24-year-olds cited price as the single largest influence on their likelihood to make a content purchase.

Ease of use ranked as the second-most influential factor, with more than 20 percent choosing this factor as most important. This becomes a more weighted factor for consumers 45 and older, with 48 percent ranking ease of use across purchase and consumption of content including search, find, purchase and play with high importance.

Viewing quality is important, particularly to those consumers who spend the most on content and use it across more devices. One fifth, or 20 percent, of consumers ages 25-34 ranked viewing quality as an influence on their buying decision.

Also, the use of multiple devices to purchase and watch content is the new norm. While the majority of video content is still purchased on devices other than smartphones, 79 percent of consumers use their personal computer to order digital content, while 39 percent also use tablets and 36 percent use Internet-connected televisions.

Younger consumers ages 25-34 are the most likely age group to own multiple devices. Interestingly, while 64 percent of respondents own a smartphone, more than 41.5 percent said they would not purchase digital content from their mobile provider.

And finally, the type of content provider has the least influence on buying behavior, with nearly one-third of all respondents citing the type of provider as least important. With less than 20 percent of consumers under 35 citing pay-TV providers as digital content leaders, CSG said that there is an opportunity for pay TV providers to focus on the individual’s interest, usage and preferences across devices to increase the weight of the provider type in content buying decisions in the younger demographic.

 “We believe these findings point to an opportunity for the Pay TV provider to personalize the content buying and delivery experience, reaching each member of a household with content offers that appeal to their preferences,” Steffen said. “Gone are the days of thinking of consumers through the single lens of the primary account holder – the content revolution demands considering the preferences of all individuals and their devices within a household to ultimately create a more loyal and satisfied customer.”

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