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Pay TV and Home Communication Services - US - October 2014

“The pay TV market is frequently rebuked for not giving consumers want they want. Meanwhile, the industry is effectively moving to give consumers what they want, while also growing profits.”
– Billy Hulkower, Senior Analyst, Technology and Media

This report answers the following key questions:

  • Are over-the-top services an indication that traditional pay TV isn’t working?
  • Is the home phone dying?
Rising internet subscriptions have counterbalanced losses in phone lines, with pay TV subscriptions flattening out. As internet subscriptions approach near-term saturation, providers will be focusing on migrating existing customers to higher-speed, higher-cost internet to boost ARPU (average revenue per unit).
Marketing materials will follow this need, likely de-prioritizing pay TV service among carriers able to supply the highest speeds of service.
 
The Market:
 
  • Over 260 million subscriptions.
  • Shake-up via mergers ahead. Bundles favored by higher-income groups.
  • Subscribers give high-speed internet a thumb’s up.
  • Subscription video on demand takes a bite out of younger ages.

 

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Direct marketing creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                        • The market
                          • Over 260 million subscriptions
                            • Figure 1: Number of households subscribing to home communication services, 2011-14
                          • Shake-up via mergers ahead
                            • Figure 2: Market penetration of leading home communication service providers, July 2014
                          • The consumer
                            • Bundles favored by higher-income groups
                              • Figure 3: Subscription to bundled services, by household income, August 2013-March 2014
                            • Subscribers give high-speed internet a thumb’s up
                              • Figure 4: Interest in high speed internet service, July 2014
                            • Subscription video on demand takes a bite out of 18-34s
                              • Figure 5: Reasons for not subscribing to pay TV service, July 2014
                            • What we think
                            • Issues and Insights

                                • Are over-the-top services an indication that traditional pay TV isn’t working?
                                  • The issues
                                    • The insights
                                      • Is the home phone dying?
                                        • The issues
                                          • The insights
                                          • Trend Applications

                                              • Trend: Make it Mine
                                                • Trend: Extend My Brand
                                                • Market Size

                                                  • Key points
                                                    • Pay TV treading water
                                                      • Figure 6: Pay TV subscriptions, 2009-14
                                                    • Internet industry growth engine
                                                      • Figure 7: Home internet subscriptions, 2009-14
                                                    • Home phone sliding
                                                      • Figure 8: Home phone subscriptions, 2009-14
                                                  • Market Drivers

                                                    • Key points
                                                      • High-speed most important to 18-44s, high income
                                                        • Figure 9: Interest in higher-speed internet, July 2014
                                                        • Figure 10: Interest in higher-speed internet service, by age, July 2014
                                                        • Figure 11: Interest in higher-speed internet service, by household income, July 2014
                                                      • 4K to drive demand for greater internet speeds
                                                        • Premium channels draw subscribers from a wide income spectrum
                                                            • Figure 12: Subscription to premium channels, by household income, January 2013-March 2014
                                                          • PPV, VOD, and DVR
                                                            • PPV
                                                              • Figure 13: Frequency of use of PPV, by household income, January 2013-March 2014
                                                              • Figure 14: Frequency of use of PPV, by age, January 2013-March 2014
                                                            • VOD use is growing, but opportunity remains with middle-income subscribers
                                                              • Figure 15: Access to VOD, July 2009-March 2014
                                                              • Figure 16: Frequency of use of VOD, July 2009-March 2014
                                                              • Figure 17: Access to VOD, by household income, January 2013-March 2014
                                                            • DVR adoption highest among high-income households
                                                              • Figure 18: DVR penetration, July 2009-March 2014
                                                              • Figure 19: DVR penetration, by household income, January 2013-March 2014
                                                              • Figure 20: DVR penetration, by age, January 2013-March 2014
                                                            • Higher-income households spend more
                                                              • Figure 21: Monthly spend, by household income, July 2014
                                                              • Figure 22: Pay TV subscription, by household income, July 2014
                                                              • Figure 23: Home phone subscription, by household income, July 2014
                                                              • Figure 24: Frequency of use of VOD, by household income, January 2013-March 2014
                                                            • Youngest and oldest adults forgo TV
                                                              • Figure 25: Monthly spend, by age, July 2014
                                                              • Figure 26: Pay TV subscription, by age, July 2014
                                                              • Figure 27: Home phone subscription, by age, July 2014
                                                              • Figure 28: Frequency of use of VOD, by age, January 2013-March 2014
                                                          • Leading Companies

                                                            • Key points
                                                              • Top five providers could become top three
                                                                  • Figure 29: Home service providers, July 2014
                                                                • Pay TV: Comcast and DIRECTV lead
                                                                  • Figure 30: Pay TV residential subscribers by leading service providers, 2013-2014
                                                                • Home phone: Legacy carriers maintain high voice penetration
                                                                  • Figure 31: Voice residential subscribers by leading service providers, 2013-2014
                                                                • Home internet: Cable gains share
                                                                  • Figure 32: Residential internet subscribers by leading service providers, 2013-2014
                                                                • Subscribers aged 25-44 prefer AT&T and Verizon
                                                                  • Figure 33: Pay TV, home phone, or home internet service subscription provider, by age, July 2014
                                                                • AT&T and Verizon do best with higher-income households
                                                                  • Figure 34: Home communications providers, by household income, July 2014
                                                              • Marketing Strategies

                                                                  • TV ads
                                                                    • DIRECTV Movers Deal
                                                                      • Figure 35: DIRECTV Movers Deal collateral, September 2014
                                                                    • Squaring off against churn
                                                                      • Figure 36: DIRECTV Starting Over TV ad, August 2014
                                                                    • DISH gives Perks
                                                                      • Figure 37: DISH on demand collateral, September 2014
                                                                    • Alton Brown touts Perks
                                                                      • Figure 38: DISH Perks Smart Choices TV ad, May 2014
                                                                    • Verizon FiOS SpeedMatch
                                                                      • Figure 39: Verizon FiOS upload speed collateral, September 2014
                                                                    • Faster uploads for everyone
                                                                      • Figure 40: Verizon SpeedMatch TV ad, September 2014
                                                                      • Figure 41: Verizon free speed upgrade collateral, September 2014
                                                                    • TWC keeps service and internet quick
                                                                      • Figure 42: TWC Ray Donovan Interruption TV ad, July 2014
                                                                    • XFINITY: Get Your Geek On
                                                                      • Figure 43: XFINITY TV ad, August 2014
                                                                    • U-verse sells GigaPower
                                                                      • Figure 44: AT&T GigaPower with Dale Watson TV ad, August 2014
                                                                    • U-verse takes a bite out of cable
                                                                      • Figure 45: AT&T vampire TV ad, June 2014
                                                                    • Direct marketing
                                                                      • XFINITY
                                                                        • Figure 46: XFINITY bilingual direct marketing collateral, September 2013
                                                                      • Cox
                                                                        • Figure 47: Cox bilingual direct marketing collateral, April 2014
                                                                      • DISH Latino
                                                                        • Figure 48: Bilingual direct marketing collateral, March 2014
                                                                      • DIRECTV
                                                                        • Figure 49: DIRECTV bilingual direct marketing collateral, September 2013
                                                                      • TWC
                                                                        • Figure 50: TWC bilingual direct marketing collateral, February 2014
                                                                      • FiOS
                                                                        • Figure 51: FiOS bilingual direct marketing collateral, February 2014
                                                                        • Figure 52: FiOS bilingual direct marketing collateral, January 2014
                                                                    • Innovations and Innovators

                                                                        • OTT pay TV service
                                                                          • STBs and apps
                                                                            • TWC
                                                                              • Figure 53: TWC TV app collateral, September 2014
                                                                            • XFINITY
                                                                              • Figure 54: X1 Remote control app collateral, September 2014
                                                                            • DISH
                                                                              • Figure 55: DISH Hopper, September 2014
                                                                            • DIRECTV
                                                                              • Figure 56: DIRECTV GenieGo, September 2014
                                                                          • Bundling and ARPU

                                                                            • Key points
                                                                              • Bundles rising
                                                                                • Figure 57: Subscription to bundled services, July 2009-March 2014
                                                                              • Phone service priced for retention
                                                                                • Figure 58: Mean monthly spend on home communication services, by types of subscriptions, July 2014
                                                                              • Bundles favored by higher-income groups
                                                                                • Figure 59: Subscription to bundled services, by household income, August 2013-March 2014
                                                                              • Bundling cellular for stickiness
                                                                                • Figure 60: Interest in cell phone bundling, by age, July 2014
                                                                              • Multiple-subscription households more keen on cell service bundles
                                                                                • Figure 61: Interest in cell phone bundling, by type of current subscriptions, July 2014
                                                                            • Pay TV

                                                                              • Key points
                                                                                • Subscription and intent to change service
                                                                                  • Figure 62: Pay TV subscription, July 2014
                                                                                • Silent minority: Unhappy but not ready for change
                                                                                  • Figure 63: Attitudes and behavior related to changing pay TV service, July 2014
                                                                                • Older may be wiser
                                                                                  • Figure 64: Attitudes and behavior related to changing pay TV service, by age, July 2014
                                                                                • Reasons for not subscribing
                                                                                  • Price tops online offerings
                                                                                    • Figure 65: Reasons for not subscribing to pay TV service, July 2014
                                                                                  • Fighting the antenna for older age groups
                                                                                    • Figure 66: Reasons for not subscribing to pay TV service, by age, July 2014
                                                                                • Home Internet

                                                                                  • Key points
                                                                                    • Usage and subscription
                                                                                      • Figure 67: Home internet usage, by household income, January 2013-March 2014
                                                                                    • Sizable gaps among 25-64s
                                                                                      • Figure 68: Home internet usage, by age, January 2013-March 2014
                                                                                    • Service largely satisfies
                                                                                      • Figure 69: Satisfaction with and concerns about current internet service, by age, July 2014
                                                                                  • Home Phone

                                                                                    • Key points
                                                                                      • Cord-cutting rampant
                                                                                        • Figure 70: Home phone subscription, July 2014
                                                                                      • Older age groups more likely to have changed service
                                                                                        • Figure 71: Switched phone service in past 12 months, by age, January 2013-March 2014
                                                                                      • Spend on the decline
                                                                                        • Figure 72: Spend on phone service, July 2009-March 2014
                                                                                      • Fax machines still common among 45-74s
                                                                                        • Figure 73: Fax machine penetration, by age, January 2013-March 2014
                                                                                      • Faxing favored by high-income groups
                                                                                        • Figure 74: Fax machine penetration, by household income, January 2013-March 2014
                                                                                      • Faxing on the decline
                                                                                        • Figure 75: Fax machine penetration, July 2009-March 2014
                                                                                    • Impact of Race and Hispanic Origin

                                                                                        • Key points
                                                                                          • Subscription and usage
                                                                                              • Figure 76: Subscription, usage, and access to home communication services, by race/Hispanic origin, August 2013-March 2014
                                                                                            • Blacks give a thumbs up to premium channels/HBO
                                                                                              • Figure 77: Subscription to premium channels, by race/Hispanic origin, August 2013-March 2014
                                                                                          • Appendix – Additional Data Tables

                                                                                            • Bundled service
                                                                                              • Figure 78: Penetration for bundled services, by age, August 2013-March 2014
                                                                                              • Figure 79: Interest in cell phone bundling, by household income, July 2014
                                                                                              • Figure 80: Interest in cell phone bundling, by race and Hispanic origin, July 2014
                                                                                            • Phone service
                                                                                              • Figure 81: Home phone subscription, by age, July 2014
                                                                                              • Figure 82: Home phone subscription, by race and Hispanic origin, July 2014
                                                                                              • Figure 83: Phone equipment ownership, July 2009-March 2014
                                                                                              • Figure 84: Phone service, by age, August 2013-March 2014
                                                                                              • Figure 85: Phone service, by race/Hispanic origin, August 2013-March 2014
                                                                                              • Figure 86: Phone service, by household income, August 2013-March 2014
                                                                                              • Figure 87: Spend on phone service, by age, August 2013-March 2014
                                                                                              • Figure 88: Spend on phone service, by race/Hispanic origin, August 2013-March 2014
                                                                                              • Figure 89: Spend on phone service, by household income, August 2013-March 2014
                                                                                            • Pay TV service
                                                                                              • Figure 90: Pay TV subscription, by age, July 2014
                                                                                              • Figure 91: Pay TV subscription, by race and Hispanic origin, July 2014
                                                                                            • Premium TV services
                                                                                              • Figure 92: Subscription to premium channels, by age, August 2013-March 2014
                                                                                              • Figure 93: Access to VOD, by age, August 2013-March 2014
                                                                                              • Figure 94: Access to VOD, by race/Hispanic origin, August 2013-March 2014
                                                                                              • Figure 95: Access to VOD, by household income, August 2013-March 2014
                                                                                              • Figure 96: Type of VOD programming watched, by age, August 2013-March 2014
                                                                                              • Figure 97: Type of VOD programming watched, by race/Hispanic origin, August 2013-March 2014
                                                                                              • Figure 98: Type of VOD programming watched, by household income, August 2013-March 2014
                                                                                              • Figure 99: Frequency of use of VOD, by age, August 2013-March 2014
                                                                                              • Figure 100: Frequency of use of VOD, by race/Hispanic origin, August 2013-March 2014
                                                                                              • Figure 101: Frequency of use of VOD, by household income, August 2013-March 2014
                                                                                              • Figure 102: DVR penetration, by age, August 2013-March 2014
                                                                                            • Leading companies
                                                                                              • Figure 103: Pay TV service provider, by age, July 2014
                                                                                              • Figure 104: Pay TV service provider, by household income, July 2014
                                                                                              • Figure 105: Pay TV service provider, by race and Hispanic origin, July 2014
                                                                                              • Figure 106: Home phone service provider, by age, July 2014
                                                                                              • Figure 107: Home phone service provider, by household income, July 2014
                                                                                              • Figure 108: Home phone service provider, by race and Hispanic origin, July 2014
                                                                                              • Figure 109: Home internet service provider, by age, July 2014
                                                                                              • Figure 110: Home internet service provider, by household income, July 2014
                                                                                              • Figure 111: Home internet service provider, by race and Hispanic origin, July 2014
                                                                                              • Figure 112: Pay TV, home phone, or home internet service provider, by race and Hispanic origin, July 2014
                                                                                            • Attitudes toward internet service
                                                                                              • Figure 113: Attitudes toward internet service, by household income, July 2014
                                                                                              • Figure 114: Attitudes toward internet service, by race and Hispanic origin, July 2014
                                                                                            • Attitudes toward TV service
                                                                                              • Figure 115: Attitudes and behavior related to changing pay TV service, by household income, July 2014
                                                                                            • Reasons for not subscribing to TV service
                                                                                              • Figure 116: Reasons for not subscribing to pay TV service, by household income, July 2014
                                                                                          • Appendix – Trade Associations

                                                                                            Companies Covered

                                                                                            • AT&T Inc.
                                                                                            • Cablevision Systems Corporation
                                                                                            • Charter Communications, Inc.
                                                                                            • Comcast Corporation
                                                                                            • Dish Network
                                                                                            • EarthLink, Inc.
                                                                                            • National Football League Inc.
                                                                                            • The DIRECTV Group Inc.
                                                                                            • Time Warner Inc.
                                                                                            • Verizon Communications Inc.
                                                                                            • YouTube, Inc.

                                                                                            Pay TV and Home Communication Services - US - October 2014

                                                                                            £3,199.84 (Excl.Tax)