Even though the recent absence of live sports and performances has created challenges for virtual multichannel video programming distributors (vMVPDs), they look set to benefit from a transition away from traditional pay-TV in the US says research from Parks Associates.
Prior to the pandemic’s effects on streaming video consumption, vMVPD subscriber growth was waning, with some vMVPDs posting continued losses. And even though Covid-19 has driven growth and in some cases recovery in the category, recent increases in vMVPD pricing make it uncertain how consumers will respond long term.
Yet the Growth and Challenges for vMVPDs report found that successful services like Hulu + Live TV and YouTube TV have been able to push the advantages in pricing, content, and platform flexibility to drive growth. The result is that 43% of US broadband households with traditional pay-TV are likely to switch to a in the next 12 months.
“Subscriber losses in traditional pay-TV continue, while the vMVPD category continues to grow, thanks to consumer price sensitivity and preferences for platform flexibility,” said Paul Erickson, senior analyst, Parks Associates commenting on the report. “Traditional pay-TV operators have online delivery in their roadmaps, if not already deployed. We expect vMVPDs will continue to grow dramatically and will gradually become the dominant offering in the pay-TV landscape.”
The Growth and Challenges for vMVPDs report also revealed 17% of vMVPD subscribers switched from traditional pay TV within the last twelve months. It added that the factors driving pay-TV defections include pricing and perceived value, while consumers positively respond to the flexibility of vMVPDs to deliver unique and targeted content packages on a variety of connected entertainment platforms.
“vMVPDs have substantial opportunity if they can avoid the pitfalls that typically drive pay-TV customer dissatisfaction, such as rising prices and inflexible content and platform options,” Erickson added. “With content prices rising and competition increasing, vMVPDs should remain conscious of consumer price sensitivity while keeping a strict adherence to a consumer-centric experience.”