Television Subscription Services - US - April 2008

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