By Alice Bartram. As we noted in our MultiChannel News guest blog post, streaming is – or is close to being – the ‘new normal’. In addition to the data points noted in that post, in the first report of their ‘The Future of TV’ series, GfK MRI identifies that 28% of all TV viewing is now done via digital streaming. Consumer choices for streaming seem endless, as summarized nicely in a recent TechCrunch article. With this growth – in both available content and consumption – comes a lot of questions regarding bundling. Questions around consumer preferences and willingness to pay.
This past May, Reuters/Ipsos surveyed 1,680 Americans on their interest in à la carte TV channel access and found overwhelming support for the idea. According to the survey, 77% would prefer to assemble their own bundles of TV channels. That is probably not a surprise. But how big a bundle is the average consumer willing to purchase and able to manage?
Currently, cable bundles give consumers over 400 channels, including HBO, Showtime, and Starz, for roughly $90 per month. At even at a $5.00 price point per channel, if unbundled, consumers would end up with less than 20 channels for the same price, and a whole bunch of apps that need to be managed. But many (most?) consumers don’t want or need 420 channels.
The Reuters/Ipsos survey found few participants willing to pay more than about $10 per channel. 40% said they’d be willing to pay up to $10 a month for ESPN on its own; with 46% saying they’d be willing to pay up to $10 a month for news channels like CNN and Fox News. As one might expect, interest at higher price points seems to wane quickly. For example, just 4% were interested in paying $30 a month for ESPN.
The results of Digitalsmiths’ Q1 2015 Video Trends Report reveal different price points. Respondents to that survey sized their ideal (personalized) line up at 17 channels. However, on average, the maximum that respondents would pay for this ideal lineup was $38 a month. That’s barely $2.25 per channel!
Most people in the business believe that bundling will not go away but will change to include a mix of “OTT” and “traditional” Pay TV services, and (much like mobile data plans?) support various price points. We are already beginning to see bundles along these lines. For example, Hulu will begin offering Showtime for an extra $8.99 a month in July, in an effort to differentiate from Netflix. Meanwhile, Verizon is testing the waters with FiOS Custom TV “skinny bundle”.
So, it appears ‘the bundle’ will be un-bundled, only to be re-bundled in a variety of ways – providing consumers with the personalization they seek in all aspects of their ‘digital life’.
Of course, regardless the bundle component and price points, it still falls to network operators to deliver the bundle content to end-consumers. Doing that with the quality consumers expect and with efficiency is becoming a greater challenge for operators around the globe. PeerApp can help. Learn how by downloading our eBook about the Evolution to Local Content Delivery.