Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Consumer survey data
- Advertising creative
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- Advanced services and rate increases drive growth
- Pay TV faces challenges from video-by-mail and the internet
- Subscribers continue to move away from cable
- Leading companies focus on technological and content differentiation
- Major providers jostle in TV advertising
- Differentiation via technology
- Under-45s and higher earners more likely to switch providers
- Pay TV carries strategic importance in bundled services
- Price considerations more important than advanced features
- Advanced features valued by 25-34-year-olds and highest earners
- Fiber optic and satellite providers more positively perceived
- Asian respondents more likely to switch providers
Insights and Opportunities
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- Points of differentiation require significant investment to endure
- Tech innovation
- Content
- Customer service
- OS and UI as differentiation
Inspire Insights
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- Trend: Guiding Choice
- What we've seen
- Trend: UGC
- What we've seen
- Implications: Video “singles” and UGC curation within the subscriber wall
- Passive into active and active into passive
Competitive Context
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- Web distribution evolves but has yet to displace basic pay TV
- Alternative distribution of movies and TV shows puts drag on pay per view
Market Size and Forecast
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- Growth of pay TV revenues continues despite recession
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- Figure 1: U.S. revenues of cable TV providers, at current prices, 2005-14
- Figure 2: U.S. revenues of cable TV providers, at inflation-adjusted prices, 2005-14
Segment Performance
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- All segments grow despite trend away from cable
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- Figure 3: U.S. revenues of pay TV providers, segmented by type, 2007 and 2009
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- Figure 4: U.S. pay TV subscribers, segmented by type, 2007 and 2009
- Figure 5: U.S. video revenues of pay TV providers, by segment, 2005-14
Segment Performance—Cable
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- Growth of wired services decelerates as subscribers leave
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- Figure 6: U.S. Video revenues of cable TV providers, at current prices, 2005-14
Segment Performance—Satellite
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- Satellite segment benefits from growing subscriber base
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- Figure 7: U.S. satellite TV revenue, at current prices, 2005-14
Segment Performance—Telcos
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- Explosive telco revenue growth declining
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- Figure 8: U.S. revenues of telco (fiber optic) pay TV providers, at current prices, 2006-14
Leading Companies
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- Leading cable companies underperform while DirecTV sees rapid growth
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- Figure 9: Video-related revenues of publicly-owned pay TV providers, 2007 and 2009
- Cable companies lose subscriber share across the board
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- Figure 10: Subscriber counts of publicly-owned pay TV providers, 2007 and 2009
- Top four cable and satellite providers carry two thirds of respondents
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- Figure 11: Pay TV provider, June 2010
- Brands positioned as tech leaders more popular among high earners
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- Figure 12: Use of pay TV providers, by household income, June 2010
- Fiber optic and satellite most popular among subscribers about to switch
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- Figure 13: Interest in new pay TV service providers, by age, June 2010
Market Drivers
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- ARPU growth derives largely from rate increases and DVR services
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- Figure 14: Breakdown of Time Warner Cable video revenues, 2007 and 2009
- Providers steal share with aggressive pricing
- Growing digital penetration allows greater revenue from advanced services
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- Figure 15: Digital cable as a percentage of total cable subscribers, 2004-09
- Pay TV carries strategic importance in growing bundled services
Television Advertising
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- Satellite and fiber optic players spend aggressively to take share
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- Figure 16: Ad spend of major pay TV brands, 2008 & 2009
- Fiber providers highlight advanced pay TV technologies
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- Figure 17: Verizon FiOS—Facebook on TV, TV ad, January 2010
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- Figure 18: AT&T U-Verse—Multi-room DVR, TV ad, June 2010
- Cable providers on defense attack newer technologies
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- Figure 19: Comcast—Shaq Drops In, TV ad, October 2009
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- Figure 20: Time Warner Cable—30 Day Guarantee, TV ad, March 2010
- Figure 21: Verizon—Xfinity Name Change, TV ad, March 2010
- Satellite providers target under-35s and offer free HD for life
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- Figure 22: DirecTV—To Tell the Truth, TV ad, March 2010
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- Figure 23: Dish Network—Astronauts Turn on Free HD, TV ad, June 2010
Brand Qualities
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- Comcast reinvents with Xfinity but falls short in delivery
- Cable providers continue to lag in customer satisfaction
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- Figure 24: American Customer Satisfaction Index scores for major pay TV providers, 2006-10
- Cable providers
- Comcast (Xfinity)
- Time Warner Cable
- Charter Communications
- Cablevision (Optimum)
- Telco providers
- Verizon FiOS
- AT&T U-Verse
- Satellite providers
- DirecTV
- Dish Network
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- Figure 25: Operational statistics of DirecTV and Dish Network, 2007-09
Innovations and Innovators
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- New technologies needed to differentiate and grow revenue
- HD channels
- DVR upgrades
- Cross-platform functionality
- 3DTV
- Emerging tech brings internet content to the TV
- Boxee Box
- Google TV
- Hulu Plus
Household Penetration
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- DVR penetration shoots upward as pay TV shows marginal gain
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- Figure 26: Household penetration of pay TV and related services, 2005-09
- DVR penetration shows stronger skews than pay TV
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- Figure 27: Household penetration of pay TV and related services, by various demographics, November 2008-December 2009
Viewing Habits
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- Most respondents still watch TV during actual broadcast
- Internet-sourced content viewed by just as many as pay per view
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- Figure 28: Sources of content viewed on TV, June 2010
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- Figure 29: Average time spent weekly watching broadcast, DVR, PPV, VOD, and internet content on TV, June 2010
- 25-34s log most hours with advanced pay TV services
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- Figure 30: Average time spent weekly watching broadcast, DVR, PPV, VOD, and internet content on TV, by age, June 2010
Plans to Change Service
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- Respondents more likely to consider pay TV change than internet or phone
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- Figure 31: Plans to change pay TV service, June 2010
- Under-45s and higher earners more likely to switch providers
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- Figure 32: Plans to change pay TV service, by age, June 2010
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- Figure 33: Plans to change pay TV service, by household income, June 2010
Reasons to Change Service
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- Price considerations more important than advanced features
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- Figure 34: Reasons to change Pay TV service, June 2010
- Advanced features appeal more to under-35s and high-earners
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- Figure 35: Reasons to change Pay TV service, by age, June 2010
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- Figure 36: Reasons to change Pay TV service, by household income, June 2010
- Pay TV carries strategic importance for phone, internet revenues
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- Figure 37: Preference for bundled services, by age, June 2010
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- Figure 38: Changing service as a bundle, January 2010
Brand Perception
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- Fiber optic providers and DirecTV are most positively perceived
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- Figure 39: Ratio of positive/negative perception of major pay TV brands, June 2010
- Fiber optic brands most positively perceived among highest earners
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- Figure 40: Ratio of positive to negative perception of major pay TV brands, by household income, June 2010
Attitudes toward Pay TV
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- Customer service and advanced features help differentiate providers
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- Figure 41: Attitudes toward pay TV service, by age, June 2010
- High earners more appreciative of advanced features, better service
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- Figure 42: Attitudes toward pay TV service, by household income, June 2010
Attitudes toward Advanced Features
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- 25-34s show greatest interest in advanced features
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- Figure 43: Attitudes toward advanced services, by age, June 2010
- Interest in 3D television stronger among under-35s, highest earners
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- Figure 44: Attitudes toward pay TV in 3D, by age, June 2010
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- Figure 45: Attitudes toward pay TV in 3D, by household income, June 2010
Impact of Race and Hispanic Origin
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- Asian respondents more likely to switch service
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- Figure 46: Plans to change pay TV service, by race and Hispanic origin, June 2010
- Asian respondents more likely to adopt internet-sourced content and 3D TV
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- Figure 47: Sources of content viewed on TV, by race and Hispanic origin, June 2010
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- Figure 48: Attitudes toward pay TV in 3D, by race and Hispanic origin, June 2010
Cluster Analysis
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- Widgeters
- Demographics
- Characteristics
- Opportunity
- Broadcasters
- Demographics
- Characteristics
- Opportunity
- Loyals
- Demographics
- Characteristics
- Opportunity
- Cluster characteristics
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- Figure 49: Pay TV clusters, June 2010
- Figure 50: Methods of viewing video on TV screens, by clusters, June 2010
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- Figure 51: Interest in changing service, by clusters, June 2010
- Figure 52: Interest in advanced features and products, by clusters, June 2010
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- Figure 53: Pay TV provider, by clusters, June 2010
- Figure 54: Perception of pay TV as a commodity, by clusters, June 2010
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- Figure 55: Negative experiences with pay TV service, by clusters, June 2010
- Cluster demographics
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- Figure 56: Pay TV clusters, by gender, June 2010
- Figure 57: Pay TV clusters, by age, June 2010
- Figure 58: Pay TV clusters, by household income, June 2010
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- Figure 59: Pay TV clusters, by race, June 2010
- Figure 60: Pay TV clusters, by Hispanic origin, June 2010
- Cluster methodology
Appendix: Other Useful Consumer Tables
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- Figure 61: Sources of content viewed on TV, by gender, June 2010
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- Figure 62: Attitudes toward advanced services, by household income, June 2010
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- Figure 63: Ratio of positive to negative perception of major pay TV brands, by age, June 2010
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Appendix: Trade Associations
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