Value or Price Driving Video Cord Cutting?

Customer account losses in the traditional pay TV ecosystem could soon accelerate to around five million a year in the U.S. market, up from about two million a year, RBC analyst Steven Cahall said. A survey conducted by RBC found that only around 55 percent of respondents planned to keep buying services from their video services provider.

The data suggest that “the floor that ultimately will keep the linear bundle” is only at around 68 million homes. SNL Kagan says current U.S. pay-TV homes number 86 million at the moment.

Precisely why consumers are cancelling subscriptions, or refusing to subscribe in the first place, typically is said to be the result either of diminishing interest in the product or high prices.

Do consumers cancel their entertainment video subscriptions because they are deemed too costly? Some say so. Others might argue that disinterest is the issue. So it might seem as though there are conflicting views about why some consumers are abandoning linear video for streaming alternatives.

Maybe not. Perhaps, as always, consumers simply are evaluating products from a value perspective. When consumers say the price of a product is “too high,” what they often mean is that perceived benefits are too low, in relationship to price.

If so, those who argue price is the main issue, and those who say demand for the product is the issue, could both be correct.


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