Abstract
The pay-TV industry consists of cable and satellite companies that provide television programming, also referred to as "video" in this report. While cable enjoys geographic monopolies and satellite has traditionally serviced rural areas, in recent years the game has changed. Satellite providers are now going head-to-head with cablecos. New entrants, namely telecom operators, threaten both. And new video viewing technologies, particularly online video, are potentially threatening alternatives. In this report, Mintel offers a comprehensive discussion of the industry' s current status and recommendations for growing subscriber and advertiser revenue in an environment of increasing consumer choice.
Analysis and insights offered include:
- an assessment of telecom competitors and online video and strategies to defend against them
- the role digital technology plays in viewership patterns and consumer preferences
- how pricing strategy impacts customer acquisition.
Insights are supported by exclusive Mintel consumer research, as well as analysis of the Simmons NCS, which delves into topics such as:
- consumer attitudes towards commercials and product placement
- consumer behavior in viewing television content
- perception of cable and satellite companies as indicated by consumer preference and articulated in marketing campaigns.
Table of Contents
- Scope and Themes
- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
- Executive Summary
- A market nearing saturation, but still growing
- Marketing bundles and packages is the norm
- Add-on services and ad revenues drive sales
- New ad models are necessary
- Internet habits now dictate TV expectations
- More younger consumers side-step traditional pay-TV
- Big screens call for quality programming
- A highly consolidated marketplace
- Satellites grew and are poised for further growth
- MVPD brands emphasize their strongest features
- Yet, consumers do not truly perceive differentiation among MVPDs
- Advertising
- Consumer attitudes towards pay-TV
- Market Size and Forecast
- Key points
- Bundling drives customer acquisition
- Bigger is better
- Lower cost of hardware
- Market valued at $102 billion in 2007
- Sales
- Figure 1: Total U.S. sales of satellite and cable pay-TV services, at
current prices, 2002-12
- Figure 2: Total U.S. sales of satellite and cable pay-TV services, at
inflation-adjusted prices, 2002-12
- Subscriptions
- Figure 3: Subscriptions and ARPU to satellite and cable pay-TV services,
2002-07
- Market size by provider type
- Cable
- Subscription and sales growth
- Figure 4: Total U.S. sales of cable pay-TV services, at current prices,
2002-12
- Figure 5: Total U.S. sales of cable pay-TV services, at
inflation-adjusted prices, 2002-12
- Figure 6: Subscriptions to cable pay-TV services, 2002-07
- Satellite
- Subscription and sales growth
- Figure 7: Total U.S. sales of satellite pay-TV services, at current
prices, 2002-12
- Figure 8: Total U.S. sales of satellite pay-TV services, at
inflation-adjusted prices, 2002-12
- Figure 9: Subscriptions to satellite pay-TV services, 2002-07
- Competitive Context
- Key points
- Online video
- Figure 10: Ownership of device for watching online video on the home
television, by age, January 2008
- 18-24s lead the way
- Figure 11: Consumer demand for "on-demand" programming, by age, January
2008
- Figure 12: Consumer demand for online video, by age, January 2008
- Apple and iTunes
- Telcos enter the pay-TV fray
- Mobile: thank goodness for couch potatoes
- Figure 13: Mobile video access, by age, January 2008
- Leveraging vertical integration to create exclusive content
- Addressing conflicts of interest with content providers through punitive
measures
- Segment Performance--Overview
- Basic vs. premium vs. add-on and advertising revenue in cable provider
sales
- Figure 14: Total U.S. sales of satellite and cable pay-TV services, by
satellite or cable provider, 2002 and 2007Figure 15: U.S. sales and forecast
of cable pay-TV sales, at current prices, by segment, 2002-08
- Figure 16: U.S. cable subscriptions, 2002-08
- Segment Performance--Basic Sales from Cable Providers
- Figure 17: Total U.S. sales of cable basic television service, at
current prices, 2002-08
- Figure 18: Total U.S. sales of cable basic television service, at
inflation-adjusted prices, 2002-07
- Segment Performance--Premium Sales from Cable Providers
- Figure 19: Total U.S. sales of premium cable television service, at
current prices, 2002-08
- Figure 20: Total U.S. sales of premium cable television service, at
inflation-adjusted prices, 2002-08
- Segment Performance--Additional Services and Advertising Sales for Cable
Providers
- Figure 21: Total U.S. sales of additional services and advertising sales
for cable providers, at current prices, 2002-07
- Figure 22: Total U.S. sales of additional services and advertising sales
for cable providers, at inflation-adjusted prices, 2002-07
- Market Drivers: The Economy and Home Theaters
- Economy
- Making use of the in-home theater
- Figure 23: Penetration of HDTV, 2004-07
- Figure 24: Sizes of television(s) owned, 2004-07
- Figure 25: Average # of television(s) per household, May 2006-June 2007
- Figure 26: Average cost of most recently purchased TV, by gender and
age, May 2006-June 2007
- Market Drivers: The Digital Conversion
- Less than a year until the end of analog signals
- The transition to digital in cable service
- Figure 27: Pay-TV revenue, analog vs digital, 2002-06
- Access to VOD rising
- Figure 28: Pay-per-view and video-on-demand usage, by year, 2005-07
- Figure 29: Pay-per-view usage, 2003-07Figure 30: Video-on-demand usage,
2005 and 2007
- Impact of the DVR on subscriptions and advertising revenue
- DVR penetration
- Figure 31: DVR ownership, by type of service, May 2006 and 2007
- Leading Companies
- Key points
- Figure 32: Pay-TV subscriptions, by leading companies, 2006 and 2007
- Figure 33: Video revenue, by leading companies, 2006 and 2007
- Brand Share
- Key points
- Introduction
- Sales
- Figure 34: Total U.S. sales of satellite and cable pay-TV services,
satellite vs cable, 2002-12
- Figure 35: Total U.S. sales of satellite and cable pay-TV services,
satellite vs cable, 2006 and 2007
- Cable vs. satellite: recent switches in service, and those considering
switches
- Figure 36: Attitudes towards switching pay-TV service, January 2008
- Consumers not seeing the difference between cable and satellite
- Figure 37: Consumer perception of cable vs. satellite, January 2008
- Figure 38: Level of interest in who provides television service, January
2008
- Subscriptions
- Figure 39: Satellite and cable pay-TV subscriptions, 2002-07
- Figure 40: Satellite and cable pay-TV subscriptions, satellite vs cable,
2006 and 2007
- Brand Qualities
- Comcast
- Time Warner
- DirecTV
- Dish
- Innovation and Innovators
- Comcast
- Time Warner
- DirecTV
- Dish
- Advertising and Promotion
- Introduction
- Adspend on standalone pay-TV service
- Figure 41: Media spend to market pay-TV as an individual service, by
selected brands, 2005 and 2006
- Adspend on bundled pay-TV service
- Figure 42: Media expenditures, by selected brands, 2005 and 2006
- Satellite and telcos tackle cable directly
- Television ads target specific groups
- Figure 43: Xtreme Clip: Dish HD Free For 6 Months & Free DVR
Upgrade, January 2008
- Figure 44: Xtreme Clip: Verizon And ESPN Employees Meet, May 2007
- Figure 45: Xtreme Clip: Man In Restaurant Promotes NFL Sunday Ticket,
August 2007
- Figure 46: Xtreme Clip: People Build Cable TV Station, March 2007
- Figure 47: Xtreme Clip: Heroes, May 2007
- Figure 48: Xtreme Clip: Blackboard/Free High Speed Internet Offer,
August 2007
- Pull marketing on CGM sites online
- Penetration of Pay-TV Products
- Figure 49: Incidence of pay-TV subscription, 2003-07
- Figure 50: Incidence of pay-TV subscription, by age, May 2006-June 2007
- Figure 51: Incidence of pay-TV subscription, by household income, May
2006-June 2007
- Attitudes Toward Alternative Pricing
- Minority interested in premium-only or pay-per-show offers
- Figure 52: Attitudes towards premium-only and pay-per-show models,
January 2008
- Majority interested in creating their own channel package
- Figure 53: Attitudes towards "à la carte" TV options, January 2008
- Reasons for not Subscribing
- Figure 54: Reasons for not subscribing to pay-TV, by gender and age,
January 2008
- Attitudes Toward Advertising
- Did the DVR really change anything?
- Figure 55: Attitudes towards TV advertising, by gender, May 2006-June
2007
- Figure 56: Attitudes towards TV advertising, by age, May 2006-June 2007
- Figure 57: Attitudes towards TV advertising and DVR capability, January
2008
- Figure 58: Attitudes towards TV advertising and DVR capability, by age,
January 2008
- Attitudes toward product placement
- Figure 59: Attitudes towards product placement, May 2006-June 2007
- The Impact of Race and Ethnicity
- Key points
- Asians and Hispanics lag in pay-TV subscription
- Figure 67: Pay-TV penetration, by race/ethnicity, May 2006-June 2007
- Blacks and Hispanics are commercial-friendly
- Figure 68: Attitudes towards advertising--18-34s, by race/ethnicity, May
2006-June 2007
- Figure 69: Attitudes towards advertising--over-35s, by race/ethnicity,
May 2006-June 2007
- Figure 70: Attitudes towards advertising--households with income under
$75K, by race/ethnicity, May 2006-June 2007
- Figure 71: Attitudes towards advertising--households with income over
$75K, by race/ethnicity, May 2006-June 2007
- Young Asians love to hate product placement
- Figure 72: Attitudes towards product placement--18-34s, by
race/ethnicity, May 2006-June 2007
- Figure 73: Attitudes towards product placement--over-35s, by
race/ethnicity, May 2006-June 2007
- Figure 74: Attitudes towards product placement--households with income
under $75K, by race/ethnicity, May 2006-June 2007
- Figure 75: Attitudes towards product placement--households with income
over $75K, by race/ethnicity, May 2006-June 2007
- Black consumers tend to own more TVs per household
- Figure 76: Average # of television sets owned--18-34s, by
race/ethnicity, May 2006-June 2007
- Figure 77: Average # of television sets owned--over-35s, by
race/ethnicity, May 2006-June 2007
- Figure 78: Average # of television sets owned--households with income
under $75K, by race/ethnicity, May 2006-June 2007
- Figure 79: Average # of television sets owned--households with income
over $75K, by race/ethnicity, May 2006-June 2007
- Appendix: Trade Associations
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