Study: Nearly 1 in 5 to ditch Sky after RWC

ditching-the-dishOnline streaming service Lightbox have released a white paper with research that is fairly ominous for Sky. According to the research, 16% of Sky’s subscribers are planning on ditching the service after the Rugby World Cup.  Sky have said they would be “stunned” if this was the case.

“Moving away from SKY TV to an SVOD provider or to free services such as YouTube means there is $100 or $150 (per month) which can potentially be freed up. These folk are making decisions on what they think is right for their families.” says Kim Niblock, Lightbox CEO.

She adds that cord cutters are also likely to feel like they are being gouged.

“The way that content is provided by pay-TV is out of kiiter with what the market wants. There are a lot of people who are philosophically working through whether or not an advertising-based service is working for them, if they want to be locked in to a subscription and if the bundled channels are of value to them.

“But it is also important to note there is little ‘blanket’ behaviour among new consumers; the market is diverse with many drivers underpinning viewing decisions.”

Cord nevers are a fascinating category, says Niblock. “Everyone loves content, there is something everyone will enjoy watching. The majority of cord nevers are seeking payment models, convenience and use of their personal devices which makes SVOD attractive in a way that pay-TV never was. This group hasn’t rejected televised entertainment, but it has rejected paying a lot of money for it. They’ve never paid for SKY TV, but they are happy to pay a dollar, so long as doing so is hassle-free.”

The Rugby World Cup – and are Kiwis ditching their dish?

Outside of international trends and insights in to television viewer behaviour, probably the most relevant questions for the local market regard the willingness or otherwise of the general public to move from broadcast pay-TV to SVOD service providers.

Delivering the necessary insight into the issue, Lightbox commissioned a report by Perceptive Research. In a survey of 500 New Zealanders via a self-completion online survey tool, the research set out to assess SKY TV current and unsubscribed
customer opinions with an emphasis on SKY Sport.

Participants were drawn from the Perceptive Online Research Panel, with the research conducted in September 2015.

The research found that perceived expense of the SKY TV subscription is the main reason for cancellation or alteration of subscriptions or packages:

Of the 37 per cent who once had a SKY TV subscription, 40 per cent cancelled in the past 12 months because it was too expensive. A quarter no longer found value in the service.

reasons-why-cancelled-sky

Of the few current subscribers who said they removed SKY TV channels, or altered their package in the past 6 to 12 months, 68 per cent said they did so because it was too expensive.

Nearly half said they didn’t use the channel(s) enough (45 per cent) (referred to as wastage)

reasons-why-change-sky-channels

The research provides an insight in to customers seeking more for their dollar. Consistent with the fact that perceived expensiveness is an issue, 41 per cent rated ‘value for money’ as the most important factor from a TV service. Latest content, no fixed-term contracts and no ads are comparatively frequently rated as second in importance. It is noteworthy that these are all features of SVOD service provides, but not necessarily features of pay-TV services.

Of the 63 per cent who currently had SKY TV, the main reasons for subscribing were for Sport (54 per cent) and because of the range of channels (53 per cent). Of the 70 per cent of subscribers who had SKY Sport, a third said they would wait to watch the next sporting league in season.

With the finale of the Rugby World Cup approaching, some 16 per cent of respondents said that following the event, SKY TV would hold little appeal to them and had plans to drop it. After the Rugby World Cup nearly a quarter (23 per cent) of those who will retain their SKY TV subscription are likely to add a subscription online TV / streaming video service such as Lightbox or Netflix in the next six months. A further 27 per cent are likely to amend their subscription to SKY TV Sport (cord shavers).

The indications are therefore strong that this particular sporting event, once concluded, might imperil the SKY TV accounts of a substantial number of the broadcaster’s existing subscribers base.

The Perceptive research also demonstrates the rise of online streaming as a competitive force for SKY TV.

While it found that fewer than one in five subscribers plan to cancel their SKY TV in the near future, nearly half of those who do intend to do so said they would use another online streaming video service (47 per cent).

Those who have already cancelled are significantly more likely to be using streaming services, either those on offer from free-to-air services or from paid subscription SVOD operators.

Streaming services are enjoying substantial penetration among SKY TV subscribers, with 58 per cent using TVNZ OnDemand and 34 per cent using 3NOW On Demand. This is significant as it is the ‘thin edge of the wedge’, demonstrating the efficacy of streaming services in delivering ‘anytime, anywhere’ content over an internet connection.

The cornerstones of broadcast TV are sports rights and reality TV, says Niblock, which are important content for many families. “However, it is up to broadcasters to make this content more accessible – and we are seeing this happen, for example, with SKY TV’s Fanpass which permits ‘pay per view’ access to sports events.”

services-used

Read the rest of the report here

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About the author

Regan is one of the co-founders of Throng Media.
If they're on, I'm usually watching Game of Thrones, The Walking Dead, 24, Battlestar Galactica, The X Factor, Survivor, House of Cards, Mad Men and the NRL.
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  • Mike

    So 1 in 6 (thats 16%) intend to cancel, by the way primary school maths says that 1 in 5 is 20% not 16%. That compares to 14.5% that cancelled last year – in a year immediately preceding a RWC. Margin of error on the survey? At 500 self completing participants is it likely to be at least 1.5% and likely more.
    Roughly speaking 125,000 subscribers cancelled last year. So about 136,000 intend to cancel in this self-completing survey (thats almost a self selecting survey). In short this is no news rather than real news. I seriously hope that Lightbox didnt pay for this survey. I’m thinking that Survey Monkey could generate more statistically meaningful results.

    How many new subscribers did Sky add last year? About 110,000. Thats 110,000 new households that did see value in the service – why didnt they just go streaming? Of the people surveyed how many were asked if they were going to subscribe to Sky? Of course the question was never asked, why let the facts get in the way of a good story.

    If the households are freeing up $100-150 per month then they are spending 50-100% more than the average subscriber. Thats a huge spend. So the average subscriber who disconnects is going to save $80/mth. Less sensationalist than $100-150 month but still meaningful.

    • Regan Cunliffe

      Roughly speaking 125,000 subscribers cancelled last year. So about 136,000 intend to cancel in this self-completing survey (thats almost a self selecting survey). In short this is no news rather than real news.

      Is that why Sky said they’d be “stunned” if it happened?

      • Mike

        Given the generally woeful reporting by Stuff who is to say that the question posed was “do you expect to lose 16% of your subscribers immediately after the Rugby World Cup Final”? The reporting is likely as poor as the research methodology.
        Why didnt Lightbox commission something similar to the Australian research that you discussed a few months ago?

  • Mike

    BTW, Has Kim Niblock revealed the number of Lightbox subscribers (subscribing and/or paying). Target was 70,000 by either 30 June 2015 or 1 year, I cant remember which. Either way its been longer than that. As a Spark shareholder shouldnt I have an update as to how the business is going?