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Pay TV - US - August 2010

Distribution of TV and movie content continues to evolve at a breakneck pace, and major players in the pay TV industry are competing intensely to claim a spot at the top of the tech chain. The pay TV industry has withstood recessionary pressures better than most, but many companies will be forced to rethink their marketing strategies as adoption of newer technologies accelerates. In this custom report, Mintel examines the dynamics of the pay TV industry and reviews the strategies of its biggest players.

Analysis and insights (supported by exclusive Mintel consumer research) offered include:

  • What types of revenue are growing fastest
  • Why subscribers are being pulled away from cable
  • Which technologies offer true points of differentiation
  • Which technologies will be disruptive in the future
  • Why respondents are switching providers
  • Which demographics are most likely to switch
  • Consumer brand perceptions of leading providers, overall and by demographic
  • Why pay TV is more strategically important than internet or phone
  • Who advanced pay TV features are most likely to attract

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Table of contents

  1. Scope and Themes

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

                    • 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

                                            • Points of differentiation require significant investment to endure
                                              • Tech innovation
                                                • Content
                                                  • Customer service
                                                    • OS and UI as differentiation
                                                    • Inspire Insights

                                                        • 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

                                                                    • 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

                                                                        • Growth of pay TV revenues continues despite recession
                                                                          • 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

                                                                        • All segments grow despite trend away from cable
                                                                          • Figure 3: U.S. revenues of pay TV providers, segmented by type, 2007 and 2009
                                                                          • 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

                                                                        • Growth of wired services decelerates as subscribers leave
                                                                          • Figure 6: U.S. Video revenues of cable TV providers, at current prices, 2005-14
                                                                      • Segment Performance—Satellite

                                                                        • Satellite segment benefits from growing subscriber base
                                                                          • Figure 7: U.S. satellite TV revenue, at current prices, 2005-14
                                                                      • Segment Performance—Telcos

                                                                        • Explosive telco revenue growth declining
                                                                          • Figure 8: U.S. revenues of telco (fiber optic) pay TV providers, at current prices, 2006-14
                                                                      • Leading Companies

                                                                        • Leading cable companies underperform while DirecTV sees rapid growth
                                                                          • Figure 9: Video-related revenues of publicly-owned pay TV providers, 2007 and 2009
                                                                        • Cable companies lose subscriber share across the board
                                                                          • Figure 10: Subscriber counts of publicly-owned pay TV providers, 2007 and 2009
                                                                        • Top four cable and satellite providers carry two thirds of respondents
                                                                          • Figure 11: Pay TV provider, June 2010
                                                                        • Brands positioned as tech leaders more popular among high earners
                                                                          • Figure 12: Use of pay TV providers, by household income, June 2010
                                                                        • Fiber optic and satellite most popular among subscribers about to switch
                                                                          • Figure 13: Interest in new pay TV service providers, by age, June 2010
                                                                      • Market Drivers

                                                                        • ARPU growth derives largely from rate increases and DVR services
                                                                            • 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
                                                                              • Figure 15: Digital cable as a percentage of total cable subscribers, 2004-09
                                                                            • Pay TV carries strategic importance in growing bundled services
                                                                            • Television Advertising

                                                                              • Satellite and fiber optic players spend aggressively to take share
                                                                                • Figure 16: Ad spend of major pay TV brands, 2008 & 2009
                                                                              • Fiber providers highlight advanced pay TV technologies
                                                                                • Figure 17: Verizon FiOS—Facebook on TV, TV ad, January 2010
                                                                                • Figure 18: AT&T U-Verse—Multi-room DVR, TV ad, June 2010
                                                                              • Cable providers on defense attack newer technologies
                                                                                • Figure 19: Comcast—Shaq Drops In, TV ad, October 2009
                                                                                • 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
                                                                                • Figure 22: DirecTV—To Tell the Truth, TV ad, March 2010
                                                                                • Figure 23: Dish Network—Astronauts Turn on Free HD, TV ad, June 2010
                                                                            • Brand Qualities

                                                                              • Comcast reinvents with Xfinity but falls short in delivery
                                                                                • Cable providers continue to lag in customer satisfaction
                                                                                  • 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
                                                                                                        • Figure 25: Operational statistics of DirecTV and Dish Network, 2007-09
                                                                                                    • Innovations and Innovators

                                                                                                      • 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

                                                                                                                        • DVR penetration shoots upward as pay TV shows marginal gain
                                                                                                                          • Figure 26: Household penetration of pay TV and related services, 2005-09
                                                                                                                        • DVR penetration shows stronger skews than pay TV
                                                                                                                          • Figure 27: Household penetration of pay TV and related services, by various demographics, November 2008-December 2009
                                                                                                                      • Viewing Habits

                                                                                                                        • Most respondents still watch TV during actual broadcast
                                                                                                                          • Internet-sourced content viewed by just as many as pay per view
                                                                                                                            • Figure 28: Sources of content viewed on TV, June 2010
                                                                                                                            • 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
                                                                                                                            • Figure 30: Average time spent weekly watching broadcast, DVR, PPV, VOD, and internet content on TV, by age, June 2010
                                                                                                                        • Plans to Change Service

                                                                                                                          • Respondents more likely to consider pay TV change than internet or phone
                                                                                                                            • Figure 31: Plans to change pay TV service, June 2010
                                                                                                                          • Under-45s and higher earners more likely to switch providers
                                                                                                                            • Figure 32: Plans to change pay TV service, by age, June 2010
                                                                                                                            • Figure 33: Plans to change pay TV service, by household income, June 2010
                                                                                                                        • Reasons to Change Service

                                                                                                                          • Price considerations more important than advanced features
                                                                                                                            • Figure 34: Reasons to change Pay TV service, June 2010
                                                                                                                          • Advanced features appeal more to under-35s and high-earners
                                                                                                                            • Figure 35: Reasons to change Pay TV service, by age, June 2010
                                                                                                                            • Figure 36: Reasons to change Pay TV service, by household income, June 2010
                                                                                                                          • Pay TV carries strategic importance for phone, internet revenues
                                                                                                                            • Figure 37: Preference for bundled services, by age, June 2010
                                                                                                                            • Figure 38: Changing service as a bundle, January 2010
                                                                                                                        • Brand Perception

                                                                                                                          • Fiber optic providers and DirecTV are most positively perceived
                                                                                                                            • Figure 39: Ratio of positive/negative perception of major pay TV brands, June 2010
                                                                                                                          • Fiber optic brands most positively perceived among highest earners
                                                                                                                            • Figure 40: Ratio of positive to negative perception of major pay TV brands, by household income, June 2010
                                                                                                                        • Attitudes toward Pay TV

                                                                                                                          • Customer service and advanced features help differentiate providers
                                                                                                                              • Figure 41: Attitudes toward pay TV service, by age, June 2010
                                                                                                                            • High earners more appreciative of advanced features, better service
                                                                                                                              • Figure 42: Attitudes toward pay TV service, by household income, June 2010
                                                                                                                          • Attitudes toward Advanced Features

                                                                                                                            • 25-34s show greatest interest in advanced features
                                                                                                                              • Figure 43: Attitudes toward advanced services, by age, June 2010
                                                                                                                            • Interest in 3D television stronger among under-35s, highest earners
                                                                                                                              • Figure 44: Attitudes toward pay TV in 3D, by age, June 2010
                                                                                                                              • Figure 45: Attitudes toward pay TV in 3D, by household income, June 2010
                                                                                                                          • Impact of Race and Hispanic Origin

                                                                                                                            • Asian respondents more likely to switch service
                                                                                                                              • 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
                                                                                                                              • Figure 47: Sources of content viewed on TV, by race and Hispanic origin, June 2010
                                                                                                                              • Figure 48: Attitudes toward pay TV in 3D, by race and Hispanic origin, June 2010
                                                                                                                          • Cluster Analysis

                                                                                                                              • Widgeters
                                                                                                                                • Demographics
                                                                                                                                  • Characteristics
                                                                                                                                    • Opportunity
                                                                                                                                      • Broadcasters
                                                                                                                                        • Demographics
                                                                                                                                          • Characteristics
                                                                                                                                            • Opportunity
                                                                                                                                              • Loyals
                                                                                                                                                • Demographics
                                                                                                                                                  • Characteristics
                                                                                                                                                    • Opportunity
                                                                                                                                                      • Cluster characteristics
                                                                                                                                                        • Figure 49: Pay TV clusters, June 2010
                                                                                                                                                        • Figure 50: Methods of viewing video on TV screens, by clusters, June 2010
                                                                                                                                                        • Figure 51: Interest in changing service, by clusters, June 2010
                                                                                                                                                        • Figure 52: Interest in advanced features and products, by clusters, June 2010
                                                                                                                                                        • Figure 53: Pay TV provider, by clusters, June 2010
                                                                                                                                                        • Figure 54: Perception of pay TV as a commodity, by clusters, June 2010
                                                                                                                                                        • Figure 55: Negative experiences with pay TV service, by clusters, June 2010
                                                                                                                                                      • Cluster demographics
                                                                                                                                                        • 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
                                                                                                                                                        • 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

                                                                                                                                                          • Figure 61: Sources of content viewed on TV, by gender, June 2010
                                                                                                                                                          • Figure 62: Attitudes toward advanced services, by household income, June 2010
                                                                                                                                                          • Figure 63: Ratio of positive to negative perception of major pay TV brands, by age, June 2010
                                                                                                                                                      • Appendix: Trade Associations

                                                                                                                                                        Companies Covered

                                                                                                                                                        • Advanced Television Systems Committee
                                                                                                                                                        • Comcast Corporation
                                                                                                                                                        • Cox Communications, Inc.
                                                                                                                                                        • Facebook, Inc.
                                                                                                                                                        • Federal Communications Commission (FCC)
                                                                                                                                                        • Google, Inc.
                                                                                                                                                        • Major League Baseball
                                                                                                                                                        • Motion Picture Association of America
                                                                                                                                                        • National Cable Television Association (NCTA)
                                                                                                                                                        • National Football League Inc.
                                                                                                                                                        • Netflix, Inc.
                                                                                                                                                        • Samsung Electronics (USA)
                                                                                                                                                        • Satellite Broadcasting Communications Association
                                                                                                                                                        • Satellite Industry Association
                                                                                                                                                        • Telecommunications Industry Association (TIA)
                                                                                                                                                        • The National Cable and Telecommunications Association
                                                                                                                                                        • Time Warner Inc.
                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                        • Universal Studios Inc.
                                                                                                                                                        • Verizon Communications Inc.
                                                                                                                                                        • YouTube, Inc.

                                                                                                                                                        Pay TV - US - August 2010

                                                                                                                                                        £3,199.84 (Excl.Tax)