One in three American households is paying for cable or satellite television at a discount rate thanks to a promotional deal, according to the results of a survey.
This week, Cowen Research said a survey of more than 1,000 American consumers found 33 percent of households were paying a discounted promotional rate for pay TV service through traditional means.
Of those on discount plans, one in five customers have a deal that will end sometime within the next 12 months.
Cowen said those details could prove troubling down the road for cable and satellite subscribers thanks to higher programming costs coupled with the ongoing economic recession brought on by the COVID-19 health pandemic.
Gregory Williams, an analyst with Cowen, said the combination of those economic factors and others could lead to “sticker shock churn” in which cable and satellite customers ditch their subscriptions for cheaper alternatives.
Cable companies typically offer customers promotional pricing for the first year or first two years of their service. Customers are typically required to sign a contract equal to or longer than their promotional deal.
Before offering a promotion, cable and satellite companies scrutinize different traits of their current and potential customers, including income, geography, credit scores and where they live.
But the ongoing COVID-19 pandemic could make things complicated for cable and satellite companies looking to offer promotional prices aimed at enticing new customers to join and current ones to stay, Cowan says. That’s because consumers are feeling the pinch due to economic conditions that have led to record unemployment and income instability.
These factors might encourage customers on promotional deals to cancel their service and look to alternatives, Cowan said. The research firm noted Altice had the highest number of customers on promotional plans according to its survey, followed by Comcast and Charter/Spectrum.
Some customers didn’t wait for a recession to hit before they “cut the cord.” For several years, streaming services have proven to be a fierce foe of cable and satellite services, with customers leaving in droves for cheaper offerings at Netflix, Hulu, Amazon Prime and others.
Data released in Cowan’s report on Wednesday showed 76 percent of American households had access to at least one of these streaming TV services or a competing one. That figure was a 3 percent increase compared to data collected last year and a 17 percent jump compared to data from two years ago.
Cowan said the increase in adoption of streaming services by consumers was due to a number of factors, including the launch of cheaper subscription services, better advertisement-supported free services, and the current health pandemic and associated rise in unemployment.
