Pay TV service providers are doing a better job of keeping customers satisfied, but that isn’t doing much to quench their subscribers’ desire to cut the cord, a new Morgan Stanley survey has found.
In its sixth annual Streaming Media Survey of 2,500 adults 18-34 conducted in March, Morgan Stanley media analyst Ben Swinburne and Internet analyst Brian Nowak found that nearly 90% of respondents who have a pay TV subscription were satisfied with their service, an increase of 400 basis points over the prior year.
At the same time, the share of respondents who said they plan to cut the pay TV cord increased 550 basis points, to 26%.
Swinburne said that while “it’s a little hard to circle that square,” the paradox seems to highlight what other analysts and operators have been saying for months — broadband service is becoming the most important part of the pay TV bundle.
A deeper look at the survey seems to bear that out. Telco service providers, which generally have higher data speeds than cable companies, had the highest satisfaction rates at 55%, but also had the highest intent to cut the cord at 22%.
Cable service providers had their best performance in the six years the study has been conducted, with just 5% of respondents saying they intend to cut the cord in the next 12 months.
Younger respondents showed the greatest desire to cut the cord — 33% of those aged 18-29 and 37% aged 30-44. But Swinburne said recent carriage disputes may have played their part. AT&T and DirecTV customers showed the greatest desire to cancel service during the survey period — 43% and 29%, respectively — while the Spanish-language broadcaster Univision has been in a carriage spat with U-verse TV. (AT&T owns both U-verse and DirecTV.)
Consumers also seem to be more willing to pay for streaming services: Those who said they would shell out for online subscriptions nearly doubled to 39% in 2016 from 19% in 2011.
More than half of total respondents cited price as the largest concern against buying TV and movies online a la carte, with more respondents willing to purchase at lower prices.
Netflix once again was first choice among services consumers would replace their pay TV subscriptions with — 35% — followed by You Tube (29%). Amazon Prime Video and Hulu Plus tied for third at 27%.
Original programming continued to drive Netflix use, with 45% of respondents saying that was a primary reason for subscribing (up from 43% last year).
Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said the survey results point to a common problem when people are asked about switching pay TV service.
“When push comes to shove, people may say they want to cut the cord but, for most, that is incredibly difficult,” Wlodarczak said. Last year’s survey seems to back that up: 20% of respondents said they intended to cut the cord, but pay TV penetration only dropped 1 percentage point, to 77.5% from 78.5% in 2014. Wlodarczak also pointed out that telco TV providers don’t have an obligation to offer service to everyone, adding, “So a survey of telco TV is effectively a survey of higher per-capita-income households that are better able to afford price increases, while cable offers service to many lower income households that feel the pinch from continued video price increases.”
CHART: Satisfaction Guaranteed
Customer satisfaction in the pay TV universe is on the rise from last year, according to Morgan Stanley research.
2016 2015
Very/Somewhat Satisfied . . . . . . . . 88% . . . . . 85%
Very/Somewhat Dissatisfied . . . . . .12% . . . . .16%
SOURCE : Alpha Wise and Morgan Stanley research
