Rise of sports apps to impact pay TV subscriptions, research suggests

A number of Australians are likely to cancel their pay TV subscriptions in the next 12 months as they have access to the content they want through sports streaming applications.

The 2018 Deloitte Media Consumer Survey found sports content as the number one reason for continued pay TV subscription, at 22%, but with the increased availability of sports apps, this could all change.

One in five respondents are likely to cancel their pay TV subscriptions in the next 12 months, due to the fact they have the sports content they need

According to the report, 10% of all male respondents have an AFL Live subscription, 6% have an NRL Live pass and 11% have an Optus Sport pass. Additionally, 20% of respondents said they would cancel their subscriptions in the next 12 months as they now have the content they want through sports apps.

Deloitte’s media survey is based on self-reported data from more than 2,000 consumers each year. Now in its seventh year, the report provides a snapshot of how people are interacting with media, entertainment and technology.

“The delineation of Australian sporting rights between broadcast and digital is likely to slow any movement of sports fans away from pay TV, with apps such as AFL Live currently unable to stream live games to TVs,” the study says.

“But this could be just a temporary blocker. The increasingly large amounts paid for rights point towards more creative and non-traditional joint bidding, and newer players such as telco providers are able to provide set-top box platforms to stream directly to TVs. There is also the looming presence of digital giants such as Netflix, Amazon, and Facebook who, despite not yet delving into sports rights in Australia, all have Over the Top (OTT) potential of their own.”

The latest research coincides with ongoing pressure by both subscription TV and free-to-air services for cross-platform broadcasting rights. Foxtel saw the necessity for cross-platform deals, locking in an arrangement with Cricket Australia and its digital arm, the Cricket Network, for streaming, this year. The subscription TV service has a strong focus on sport. This year it is set to launch a dedicated cricket channel, and it also runs dedicated AFL and NRL channels.It also runs an international sports streaming product.

But sport is also a primary focus for telco giants such as Telstra and Optus, which have digital rights to sports including the AFL and Premier League.

Outside of sports apps, the primary reason (55%) for cancellation of pay TV subscriptions is the content available on subscription video-on-demand services, Netflix and Stan. 16% of respondents said they are likely to cancel their subscription service in the next 12 months, a drop from 20% last year.

As of 2018, 57% of Australian respondents said they require more than one SVOD service. The preferred platform among respondents was Netflix, at 89%, beating Stan’s 26% and Foxtel Now’s 23%. Respondents also suggested local content on these services was important (58%). 75% of respondents said they wanted to search and discover all streaming video content in one place.

Additionally, 21% of video and music streaming services received subscription through a telecommunications plan. An example of this would be TPG’s bundle with pay-TV service, Fetch.

According to the research, 70% of respondents said entertainment bundles was a factor in purchasing mobile or internet plans, while 79% said it made them more likely to stay with their provider and 79% believed bundled subscriptions presented better value.

Source: Deloitte (Click to enlarge)

Fetch CEO Scott Lorson told Mumbrella that “proliferation of content options” had helped both consumers and telcos.

“With the commoditisation of mobile and broadband data, entertainment services have become the clear hero proposition in telco bundles, with proven acquisition and churn benefits,” he explained.

“The traditional ‘pull’ model of selling pay TV is quickly becoming obsolete, as consumers opt for the convenience and value of bundled offerings.  Fetch has ridden the wave of this new ‘push’ dynamic, having added nearly 500,000 subscribers in the past three years alone.”

Despite the ongoing challenges, pay TV remains the most-valued content subscription across all age groups, outdoing SVOD, music streaming, gaming, newspaper and magazine subscriptions.

Traditional news formats, such as TV news, talk shows, radios and newspapers are the most-favoured news source for respondents, at 51%.

Newspaper and magazine subscriptions are owned by 17% and 11% of respondents respectively, compared to 16% for both last year – a very slight increase for newspapers. And despite positive rhetoric around subscriptions, paying for news is still met with ‘reluctance’ – 64% of respondents said “nothing” would entice them to pay for news. Just 22% of respondents said they would pay for news online to avoid ads, but the survey notes that is an unlikely driver toward paid digital models.

“Subscription loyalty is as important, if not more important, than new subscriber acquisitions,” the survey added.

“59% of newspaper subscribers and 49% of magazine subscribers have held their subscriptions for three years or more, with Xers, Boomers, and Matures holding subscriptions for the longest.”

Deloitte Sydney’s managing partner and technology media and telco consulting partner, Niki Alcorn, said people are finding it harder to decide what to watch, how and where.

“Nearly a quarter of respondents are uncomfortable with the algorithm-based program recommendations created to direct us through the ‘content jungle’ (raising concern about the impact of these on future programming decisions) and 75% would like to be able to search all content in the one place,” Alcorn said.

Kimberly Chang, Deloitte’s TMT lead partner, said the increase of telcos investing in digital entertainment was evident this year.

“The strategic importance of digital entertainment to telcos is now unmistakable. 70% of respondents say that digital entertainment inclusions influenced their purchase decision, and 79% say it is a key reason for staying with their provider,” Chang said.

“We expect to see telcos increasingly entering content rights deals, particularly through sport, as they  strive to create greater value from increased investments in bandwidth.”

Mumbrella has approached Foxtel for comment.


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