A new study from Parks Associates found that cord-cutters pay an average of $85 per month for OTT services, including online pay-TV and streaming subscriptions. When compared with the cost of traditional pay-TV packages, consumers who have decided to cut the cord are saving about $30 per month.
“Cost concerns drove many consumers away from traditional pay-TV, and OTT services are delivering on the promise that they can offer desired video content at a considerably lower price point,” said Elizabeth Parks, President of Parks Associates. “But we find 47% of cord-cutters subscribe to four or more OTT services, so in order to have an optimal video portfolio, they are creating their own video bundles by stacking OTT services.”
Because there are so many streaming services available, and they all offer something different, consumers are putting together their own bundles. Even though consumers may be subscribing to a variety of services, they are still saving money compared to traditional pay-TV.
Parks Associates also studied the habits of cord-cutters compared to cord-nevers. The report notes that cord-nevers are “US broadband households who have never subscribed to traditional TV.”
Cord-cutters spend roughly twice as much on OTT services as cord-nevers do each month. Cord-cutters may be trying to replicate the traditional pay-TV packages they had access to before cutting the cord. Meanwhile, cord-nevers may be more satisfied with a smaller selection of content and features without prior pay-TV experience.
“As they migrate away from traditional pay-TV, cord-cutters seek service offerings that more closely meet their video content needs with the added value of flexibility at a lower cost,” Parks said. “OTT services have to continually deliver flexibility and customization at a reasonable cost to keep these subscribers engaged and retain them on an ongoing basis.”