Young Adults Prefer SVOD

12 Jul, 2017 By: Erik Gruenwedel

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General population still covets traditional pay-TV

America’s young adult demographic prefers subscription streaming video-on-demand services over traditional pay-TV, according to new data from The Diffusion Group (TDG).

The research group found that SVOD usage and favorability is largely based on age. About 57% of dual-service users in a recent online study of 2,015 adults chose legacy pay-TV, with 43% opting for streaming services like Netflix and Hulu. As it turns out, four in 10 TV viewers choose SVOD over legacy pay-TV.

“No, this does not yet constitute perceptual parity,” Michael Greeson, president of TDG, said in a statement. “But there is no doubt that SVOD has taken and is taking a growing part of mainstream mindshare, especially among younger viewers.”

Notably, TDG's analysis found that 65% of 18- to 24-year-olds select SVOD over pay-TV, a rate that declines as age increases. Nearly 72% of 55- to 65-year-olds chose pay-TV — a rate than declines as age decreases.

Indeed, pay-TV operators face the growing threat that today's SVOD user could very will be tomorrow’s non-MVPD subscriber.

Unlike pay-TV operator Dish Network that risks losing subscribers to online subsidiary Sling TV, standalone online TV operators have no conflict of interest transitioning SVOD users to multi-channel online TV subs. The new revenue will be accretive to average revenue per user (ARPU), not dilutive, as the linear package also includes the SVOD service. Cannibalization is thus not a concern for virtual operators as it is for the growing number of legacy providers now dabbling in multi-channel streaming services.

“The question now is whether pure-play broadband pay-TV providers, those without legacy assets, like Hulu TV, can capitalize on the opportunity,” Gleeson said.

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