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Pay TV and Home Communication Services - US - March 2015

“With households trimming and cutting television service, providers will likely set sights on continued capital expenditure for and marketing of ultra-high speed internet. Significant questions hang over this strategy: do households need that speed, and how much more will they be willing to pay for it?”
– Billy Hulkower, Senior Analyst, Technology and Media

This report answers the following questions:

  • How much speed do we need?
  • Is DISH Sling TV a game changer?
This report explores subscription to pay TV, home phone, and home internet service, with a particular focus on the pay TV industry. Discussions include the emergence of competing internet-based pay TV service, attitudes and interest in higher-speed internet, the role of age and household income in subscription, subscription to bundled services, average spend, and interest in changing carriers, among other topics. These subjects are covered utilizing results from both qualitative and quantitative studies conducted specifically for this report.

This report covers subscriptions for television, home internet, and home phone service, including when these services are sold as bundles from the same provider and when sold individually.

The industry may be concerned about the potential cannibalization of existing subscribers as lower-cost internet-based MVPD (multichannel video programming distributor) options rollout, but fear of seeing potential losses from DISH Sling or other new services will not prevent them from occurring. The best response is to forge ahead in an arena at which providers excel – experimenting with new prices and plans to maximize revenue. The vast majority of households remain subscribers to all three legs of service, and continuing efforts to meet their changing needs will keep these subscribers within the existing system.
 

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Quantitative survey
              • Qualitative survey
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                        • The market
                          • Total number of subs declines in 2014
                            • Figure 1: Pay TV, home internet, and home phone subscriptions 2011-14
                          • Comcast leads
                            • Figure 2: Service carrier for home internet, pay TV, and home phone service, December 2014
                          • Shifts in type of internet service mask slow down
                            • Figure 3: Type of internet service used at home, February 2009-September 2014
                          • Average spend $141 per month
                            • Figure 4: Mean monthly spend, by type of subscriptions, December 2014
                          • The consumer
                            • Bundles fall in 2014
                              • Figure 5: Pay TV, home phone, and home internet subscription, January-September 2014
                            • Potential need to shift targets
                              • Figure 6: Subscription to pay TV, internet, phone and bundled services, by household income, January-September 2014
                            • Satisfaction runs high
                              • Figure 7: Satisfaction with current services, December 2014
                            • Limited interest in changing carriers
                              • Figure 8: Changing service, December 2014
                            • What we think
                            • Issues and Insights

                                • How much speed do we need?
                                  • The issues
                                    • The insights
                                      • Is DISH Sling TV a game changer?
                                        • The issues
                                          • The insights
                                          • Trend Applications

                                              • Trend: Minimize Me
                                                • Trend: Who Are the Joneses?
                                                  • Futures Trend: Brand Intervention
                                                  • Market Size

                                                    • Key points
                                                        • Figure 9: Pay TV subscriptions, 2011-14
                                                        • Figure 10: Home internet subscriptions, 2011-14
                                                        • Figure 11: Home phone subscriptions, 2011-14
                                                    • Market Drivers

                                                      • Key points
                                                        • Mobile as gateway to home internet subscription
                                                          • Figure 12: Devices used to access internet at home, February 2009-September 2014
                                                          • Figure 13: Devices used to access internet at home, February 2009-September 2014
                                                        • Gaps between use and subscription
                                                          • Figure 14: Devices used to access internet at home, by age, January-September 2014
                                                          • Figure 15: Devices used to access internet at home, by household income, January 2014-September 2014
                                                        • Online gaming and streaming HD
                                                          • Figure 16: Use of streaming HD and graphics-heavy video gaming, by age, December 2014
                                                          • Figure 17: Use of streaming HD and graphics-heavy video gaming, by presence of children in household, December 2014
                                                          • Figure 18: Use of streaming HD and graphics-heavy video gaming, by intent to change service, December 2014
                                                      • Competitive Context

                                                        • Key points
                                                          • Rising number of options in sVOD
                                                            • High costs make households consider cutting the cord
                                                              • Figure 19: Mean monthly spend, by types of subscriptions, December 2014
                                                            • Price chief reason for not subscribing
                                                              • Figure 20: Reasons for not subscribing to pay TV service, by age, July 2014
                                                            • Content, promotions draw some cord-cutters back
                                                              • Figure 21: Reasons for resuming pay TV service, by household income, December 2014
                                                          • Leading Companies

                                                            • Key points
                                                                • Figure 22: Home internet, pay TV, and home phone service providers, December 2014
                                                                • Figure 23: Pay TV service provider, by household income, December 2014
                                                            • Marketing Strategies

                                                              • XFINITY
                                                                • DirecTV
                                                                  • TWC (Time Warner Cable)
                                                                    • DISH
                                                                      • Verizon FiOS
                                                                        • AT&T U-verse
                                                                          • Direct marketing
                                                                            • Figure 24: DishLATINO direct mail, December 2014
                                                                            • Figure 25: Comcast X1 direct mail, September 2014
                                                                            • Figure 26: Comcast customer marketing, March- October 2014
                                                                        • Innovation and Innovators

                                                                          • Bundling sVOD
                                                                            • OTT MVPD
                                                                              • Sony PlayStation Vue
                                                                                • DISH Sling TV
                                                                                  • Standalone sVOD offerings
                                                                                  • Qualitative Results – Internet Service

                                                                                    • Key points
                                                                                      • Service selection
                                                                                        • Perceptions on adequacy of current internet speed
                                                                                          • Awareness of type of internet connection
                                                                                            • Awareness of and understanding of numerical standards
                                                                                            • Qualitative Results – Pay TV Service

                                                                                              • Key points
                                                                                                • Service selections
                                                                                                  • Frustrations with current provider
                                                                                                    • DVR service
                                                                                                      • VOD service
                                                                                                        • Search and discovery
                                                                                                        • Subscription

                                                                                                          • Key points
                                                                                                            • Lower levels of subscription among 18-34s
                                                                                                              • Figure 27: Subscription to pay TV, DVR, internet, phone, and bundled services, by age, January-September 2014
                                                                                                              • Figure 28: Video-on-demand services, by age, January-September 2014
                                                                                                            • Continuing need for lower-cost service
                                                                                                              • Figure 29: Subscription to pay TV, DVR, phone service, and bundled services, by household income, January-September 2014
                                                                                                              • Figure 30: Subscription to premium channels, by household income, January-September 2014
                                                                                                              • Figure 31: Video-on-demand services, by household income, January-September 2014
                                                                                                              • Figure 32: Frequency of use of video-on-demand, February 2009-September 2014
                                                                                                          • Attitudes to Pay TV

                                                                                                            • Key points
                                                                                                              • One in three opt for lowest-price
                                                                                                                • Figure 33: Factors in carrier selection, by age, December 2014
                                                                                                                • Figure 34: Factors in carrier selection, by gender and age, December 2014
                                                                                                              • Distinct collateral for distinct demos
                                                                                                                • Figure 35: Factors in carrier selection, by household income, December 2014
                                                                                                              • Vast majority satisfied
                                                                                                                • Figure 36: Attitudes and behavior related to changing pay TV service, by carrier, December 2014
                                                                                                              • Time to get skinny
                                                                                                                • Figure 37: Attitudes favorable to internet-delivery of pay TV service, by age, December 2014
                                                                                                                • Figure 38: Attitudes favorable to internet-delivery of pay TV service, by gender and age, December 2014
                                                                                                                • Figure 39: Attitudes favorable to internet-delivery of pay TV service, by presence of children in household, December 2014
                                                                                                                • Figure 40: Attitudes favorable to internet-delivery of pay TV service, by carrier, December 2014
                                                                                                            • Changing Service

                                                                                                              • Key points
                                                                                                                • Narrowing the target
                                                                                                                  • Figure 41: Changing service, December 2014
                                                                                                                • Focusing on youth
                                                                                                                  • Figure 42: Changed service in past year, selected demographics, December 2014
                                                                                                                  • Figure 43: Intent to change service, selected demographics, December 2014
                                                                                                                • Higher-income groups ready to make a move
                                                                                                                  • Figure 44: Plans to change service, by household income, December 2014
                                                                                                                  • Figure 45: Average monthly bill, by household income, December 2014
                                                                                                                • To switch or to cut?
                                                                                                                  • Figure 46: Consideration for cutting pay TV service, by intent to change service, December 2014
                                                                                                                  • Figure 47: Attitudes favorable to internet-delivery of pay TV service, by intent to change service, December 2014
                                                                                                                • Role of price and promotions
                                                                                                                  • Figure 48: Factors in carrier selection, by intent to change service, December 2014
                                                                                                                • Role of internet in switching
                                                                                                                  • Figure 49: Pay TV selection based on desired ISP, by intent to change service, December 2014
                                                                                                                  • Figure 50: ISP selection based on desired pay TV carrier, by intent to change service, December 2014
                                                                                                                  • Figure 51: Satisfaction with current home internet service, by intent to change service, December 2014
                                                                                                              • Interest in Faster Internet

                                                                                                                • Key points
                                                                                                                    • Figure 52: Satisfaction with current home internet service, by age, December 2014
                                                                                                                    • Figure 53: Interest in high-speed internet, by age, December 2014
                                                                                                                    • Figure 54: Interest in high-speed internet, by household income, December 2014
                                                                                                                    • Figure 55: Interest in high-speed internet, by presence of children in household, December 2014
                                                                                                                • Impact of Race and Hispanic Origin

                                                                                                                  • Key points
                                                                                                                    • Time to focus on Hispanics
                                                                                                                      • Figure 56: Subscription to pay TV, internet, phone, and bundled services, by race/Hispanic origin, January-September 2014
                                                                                                                      • Figure 57: Video-on-demand services, by race/Hispanic origin, January 2014-September 2014
                                                                                                                    • DVR potential opportunity among Black subscribers
                                                                                                                      • Figure 58: Subscription to premium channels and DVR service, by race/Hispanic origin, January-September 2014
                                                                                                                  • Appendix – Additional Data Tables

                                                                                                                    • Market drivers
                                                                                                                      • Figure 59: Use of streaming HD and graphics-heavy video gaming, by household income, December 2014
                                                                                                                      • Figure 60: Use of streaming HD and graphics-heavy video gaming, by carrier, December 2014
                                                                                                                    • Leading companies
                                                                                                                      • Figure 61: Pay TV service provider, by presence of children in household, December 2014
                                                                                                                      • Figure 62: Home internet service provider, by age, December 2014
                                                                                                                      • Figure 63: Home internet service provider, by gender and age, December 2014
                                                                                                                    • Subscription and feature usage
                                                                                                                      • Figure 64: Access to video-on-demand, February 2009-September 2014
                                                                                                                      • Figure 65: Subscription to premium channels, February 2009-September 2014
                                                                                                                      • Figure 66: Subscription to premium channels, by age, January 2014-September 2014
                                                                                                                      • Figure 67: Subscription to premium channels, by household income, January-September 2014
                                                                                                                      • Figure 68: Access to pay-per-view, February 2009-September 2014
                                                                                                                      • Figure 69: Frequency of use of pay-per-view, February 2009-September 2014
                                                                                                                      • Figure 70: Type of pay-per-view programming watched, February 2009-September 2014
                                                                                                                    • Carrier selection
                                                                                                                      • Figure 71: Factors in carrier selection, by presence of children in household, December 2014
                                                                                                                      • Figure 72: Factors in carrier selection, by carrier, December 2014
                                                                                                                      • Figure 73: ISP selection based on desired pay TV carrier, by carrier, December 2014
                                                                                                                      • Figure 74: ISP selection based on desired pay TV carrier, by household income, December 2014
                                                                                                                      • Figure 75: ISP selection based on desired pay TV carrier, by presence of children in household, December 2014
                                                                                                                    • Changing carriers
                                                                                                                      • Figure 76: Attitudes and behavior related to changing pay TV service, by age, December 2014
                                                                                                                      • Figure 77: Attitudes and behavior related to changing pay TV service, by gender and age, December 2014
                                                                                                                      • Figure 78: Attitudes and behavior related to changing pay TV service, by household income, December 2014
                                                                                                                    • Internet usage
                                                                                                                      • Figure 79: Devices used to access internet at home, by race/Hispanic origin, January-September 2014
                                                                                                                      • Figure 80: Wi-Fi usage, February 2009-September 2014
                                                                                                                    • Phone service
                                                                                                                      • Figure 81: Spend on phone service, February 2009-September 2014
                                                                                                                      • Figure 82: Switched phone service in past twelve months, February 2009-September 2014

                                                                                                                  Companies Covered

                                                                                                                  • Time Warner Inc.

                                                                                                                  Pay TV and Home Communication Services - US - March 2015

                                                                                                                  £3,199.84 (Excl.Tax)