OTT Services Make Pay TV Look Like a Poor Value, Parks Finds

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When consumers can get a streaming video service with live channels and an on-demand library for $15 per month, their $80 per month cable or satellite service starts to look like a poor value. That's one finding from Parks Associates, which revealed video OTT and pay TV data today.

Looking at households that have changed their pay TV service in the past year, Parks finds 33 percent of those cutting the cord and 10 percent of those trimming their service see streaming options as a substitute for pay TV. Streaming is emerging as a better value for many viewers.

"The primary driver for pay TV cancellation and downgrades continues to revolve around pricing and perceived value. While some consumers consciously plan to use OTT video services to address the absence of pay TV content, most consider each offering on its own merits," says Brett Sappington, senior director of research at Parks Associates.

When U.S. broadband households that changed their pay TV service in the past year were asked why they did so, the most common reason was that the service wasn't worth the monthly price. The second was that the provider increased the price, and the third that the customer liked the service but could no longer afford it.

Parks Associates' report "Churn and Retention in Pay TV" is available for purchase.

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