Satisfaction levels for users of online streaming services such as Netflix Inc. (Nasdaq: NFLX) and Hulu LLC , Amazon.com Inc. (Nasdaq: AMZN) were the lowest for cord-cutters, according to a new study from J.D. Power reported in The Wall Street Journal.
The study of 4,000 consumers carried out in June/July 2016 found that 60% of OTT video users still subscribe to pay-TV, while 23% are "cord-shavers," who have canceled some of their services but not entirely cut the cord. Approximately 13% have completely canceled their pay-TV service (cord-cutters) and another 4% are "cord-nevers" who have never subscribed to pay-TV and only use OTT services.
Interestingly, the group that had both pay-TV and OTT were the happiest, while cord-cutters were the least satisfied.
There are a number of potential explanations for this. The somewhat maligned pay-TV services do provide a lot of TV content. While the price may be high, and consumers may get a number of unnecessary channels bundled in, there is content included that they do want to watch.
But perhaps they only realize that once they have canceled their subscription. And aggregating an equivalent package of services online could end up costing far more.
Equally it could be a that cord-cutters are just more difficult to please. As a group, they were difficult to satisfy with a pay-TV package -- that's why they cut the cord. And now they are dissatisfied with their OTT service. (See Previous Quarter Was Highest Ever for Cord-Cutting, Say Analysts.)
Age might also be a factor, since cord-cutters tend to be younger (18-34 yrs).
Also, the fragmentation of OTT services could be a constraint. If you want to watch both Game of Thrones and Stranger Things, you need to subscribe to both HBO Now and Netflix. Subscribing to multiple services can get expensive, especially if the cost of pay-TV was a reason for cutting the cord. (See Growth of Netflix Competitors Could be Positive for Pay-TV Providers and Era of OTT Aggregation Beginning, Says New Study .)
The survey is important in that it suggests there may be "cord-returners" sometime in the future. Analysts have long wondered if cord-cutting is a transitional event, in other words it has more to do with income or being in university or shared accommodation, and that at a certain life stage many will return to a more traditional pay-TV set-up. This finding of lower satisfaction levels isn't necessarily related, but does suggest that we might see cord-cutters sign up for pay-TV simply because they are unhappy with their OTT service.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation