Survey: Consumers Want Cheap OTT

September 14, 2016

By Mike Farrell

Consumers may want their content when they want it and where they want it, but they don’t want it to cost much, according to a new survey by MoffettNathanson.

MoffettNathanson partnered with researcher Survata to find out what consumers would expect an OTT service to cost and found that less than a third believed a slimmed-down Internet-deolivered content package should be priced at $40 per month or higher. The majority belived $30 per month or less was the better price tag.

The $40 price point is crucial because that is what Hulu is expected to charge for its slimmed-down OTT service scheduled to debut next year.

Survata interviewed 513 online respondents between July 15 and July 18, and included individuals that already had a subscription TV service as well as those that did not have pay TV.

In a note to clients, MoffettNathanson principal and senior analyst Craig Moffett wrote that using a survey to determine consumers’ willingness to pay for anything is “fraught with peril,” because respondents don’t always do what they say and isn’t usually enough to figure out what most would pay for a service.

But pricing is important because the dilemma facing OTT providers like Hulu and DirecTV (which plans to launch its OTT service DirecTV Now by the end of the year) is finding a point that will attract enough customers, but not erode their core subscription business while allowing them to make a profit.

Our survey confirms that a segment of the population is interested… but threading the needle at an economically workable price that appeals to enough consumers to be viable, and which will selectively target cord-cutters and cord-nevers rather than existing pay TV subscribers, will be very challenging indeed,” Moffett wrote.

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For more on winning the OTT video war, check out our guide – OTT Pricing Strategies