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Pay TV - US - October 2011

Consumers desire to cut costs in a struggling economy, in addition to the expansion of free and lower-cost content options, present challenges to the $100 billion pay TV industry, and fears of cord-cutting abound. As new technologies develop, consumers continue to shift or cancel subscriptions, spelling a slowdown in revenue growth and lower subscriber counts. Industry players will need to rethink their marketing mix 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 offered include:

  • what types of revenue are growing fastest
  • what role does online content play in subscribership
  • why subscribers are being pulled away from cable
  • which technologies offer true points of differentiation
  • which technologies will be disruptive to the pay TV model
  • consumer brand perceptions of leading providers and service in general
  • marketing strategies and recent innovations of industry leaders
  • why respondents are switching providers
  • which demographics are most likely to switch
  • which demographics are most likely to be drawn toward advanced pay TV features.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Advertising creative
              • U.S. Consumer Household Panel Direct Mail Methodology
                • Data collection methodology
                  • Geographic specifications
                    • Estimated mail volume methodology
                      • Abbreviations and terms
                        • Abbreviations
                          • Terms
                          • Executive Summary

                            • Subscriptions down, but little indication of cord cutting due to alternative content options
                              • High consumer penetration, with cost leading choices
                                • Strong drivers for growth in the industry include increase in TV viewership
                                  • Consumers indicate low intent to cancel service altogether
                                    • Leading companies promote digital video recorder (DVR) technology among other advances
                                      • Competitive Context
                                        • Consumers indicate advanced features as “nice to have,” but few indicate willingness to switch providers for them
                                        • Insights and Opportunities

                                          • Interactive viewing technology
                                            • Getting it all on-demand
                                            • Inspire Insights

                                                • Trend: Make It Mine
                                                  • Trend: Guiding Choice
                                                  • Market Size and Forecast

                                                    • Key points
                                                      • Projected 2011 revenue gains smallest in half-decade
                                                        • Sales and forecast of pay TV providers
                                                          • Figure 1: U.S. revenues of pay TV providers, at current prices, 2006-16
                                                          • Figure 2: U.S. revenues of pay TV providers, at inflation-adjusted prices, 2006-16
                                                        • Fan chart forecast
                                                            • Figure 3: Fan chart forecast of U.S. revenues of pay TV providers, at current prices, 2006-16
                                                        • Market Drivers

                                                          • Key points
                                                            • TV viewership on the rise
                                                              • Continued unemployment strains consumer spending
                                                                • Figure 4: U.S. unemployment, January 2007-July 2011
                                                              • Multigeneration households on the rise
                                                                • Decreasing housing starts
                                                                  • Figure 5: New home starts, January 2010–August 2011
                                                              • Competitive Context

                                                                • Content options beyond TV proliferate, but consumers still tuning in
                                                                  • Figure 6: Pay TV subscription status, by ownership of alternative content delivery, July 2011
                                                                • Internet video
                                                                  • Network sites
                                                                    • Aggregator sites
                                                                      • Internet TV
                                                                      • Segment Performance

                                                                        • Overview
                                                                          • Revenue growth slowed by subscriber losses
                                                                            • Pay TV provider revenue and subscribers, by segment
                                                                              • Figure 7: U.S. revenues of pay TV providers, segmented by type, 2009-11
                                                                              • Figure 8: U.S. pay TV subscribers, segmented by type, 2009-11
                                                                              • Figure 9: U.S. video revenues of pay TV providers, by segment, 2006-16
                                                                            • Cable—struggles to maintain dominance
                                                                              • Figure 10: U.S. video revenues of cable TV providers, at current prices, 2006-16
                                                                            • Satellite—makes gains, but thunder stolen by telco
                                                                              • Figure 11: U.S. satellite TV revenue, at current prices, 2006-16
                                                                            • Telcos—Projected growth stabilizing
                                                                              • Figure 12: U.S. revenues of telco (fiber optic) pay TV providers, at current prices, 2006-16
                                                                          • Leading Companies

                                                                            • Key points
                                                                              • No change in share among pay TV leaders
                                                                                • Figure 13: VIDEO-RELATED REVENUES OF PUBLICLY OWNED PAY TV PROVIDERS, 2010-11
                                                                              • Cable subscriber losses drive industry decline
                                                                                • Figure 14: SUBSCRIBER COUNTS OF PUBLICLY OWNED PAY TV PROVIDERS, 2010-11
                                                                              • Telcos favored by highest income earners
                                                                                • Figure 15: Pay television service provider by household income, July 2011
                                                                              • Cable providers
                                                                                • Comcast (Xfinity)
                                                                                  • Time Warner
                                                                                    • Cablevision (Optimum)
                                                                                      • Charter Communications
                                                                                        • Satellite providers
                                                                                          • Figure 16: Satellite provider, by household income, July 2010-March 2011
                                                                                        • DirectTV
                                                                                          • Dish Network
                                                                                            • Telco providers
                                                                                              • Verizon (FiOS)
                                                                                                • AT&T (U-verse)
                                                                                                  • Leading companies by urban area
                                                                                                    • Figure 17: Pay television service provider by urban area, July 2011
                                                                                                  • Subscribers feel strongly about satellites
                                                                                                    • Figure 18: Positive vs. negative brand perceptions, July 2011 (Part 1)
                                                                                                    • Figure 19: Positive vs. negative brand perceptions, July 2011 (Part 2)
                                                                                                • Innovations and Innovators

                                                                                                  • New technologies needed to differentiate and grow revenue
                                                                                                    • Expanding viewing opportunities
                                                                                                      • Exclusive content and original programming
                                                                                                        • Working with online content and enhancing connectivity
                                                                                                          • The human aspect of technology
                                                                                                          • Marketing Strategies

                                                                                                            • Overview of the brand landscape
                                                                                                              • Cable—promotes bundles and cost savings
                                                                                                                • Brand analysis: Comcast (Xfinity)
                                                                                                                  • Figure 20: Brand analysis of Comcast (Xfinity), 2011
                                                                                                                • Online initiatives
                                                                                                                  • Figure 21: Comcast (Xfinity) online ad, June 2011
                                                                                                                  • Figure 22: Comcast (Xfinity) Xfinity can campaign, October 2011
                                                                                                                  • Figure 23: Xfinity4College Facebook page, October 2011
                                                                                                                • TV presence
                                                                                                                  • Figure 24: Comcast (Xfinity), television ad, 2011
                                                                                                                • Print and other
                                                                                                                  • Figure 25: Comcast (Xfinity) email ad, August 2011
                                                                                                                • Brand analysis: Time Warner Cable
                                                                                                                  • Figure 26: Brand analysis of Time Warner Cable, 2011
                                                                                                                • Online initiatives
                                                                                                                  • Figure 27: Time Warner Cable online ad, July 2011
                                                                                                                • TV presence
                                                                                                                  • Figure 28: Time Warner Cable, television ad, 2011
                                                                                                                • Print and other
                                                                                                                  • Figure 29: Time Warner Cable email ad, January 2011
                                                                                                                • Brand analysis: Charter Communications
                                                                                                                  • Figure 30: Brand analysis of Charter Communications, 2011
                                                                                                                • Online initiatives
                                                                                                                  • Figure 31: Charter online ad, August 2011
                                                                                                                • TV presence
                                                                                                                  • Figure 32: Charter Communications, television ad, 2011
                                                                                                                • Print and other
                                                                                                                  • Figure 33: Charter email ad, September 2011
                                                                                                                • Brand analysis: Cox Communications
                                                                                                                  • Figure 34: Brand analysis of Cox Communications, 2011
                                                                                                                • Online initiatives
                                                                                                                  • Figure 35: Cox Communications online ad, February 2011
                                                                                                                • TV presence
                                                                                                                  • Figure 36: Cox Communications, television ad, 2011
                                                                                                                • Print and other
                                                                                                                  • Figure 37: Cox Communications email ad, May 2011
                                                                                                                • Satellites—push low cost, DirecTV highlights offerings
                                                                                                                  • Brand analysis: DirecTV
                                                                                                                    • Figure 38: Brand analysis of DirecTV, 2011
                                                                                                                  • Online initiatives
                                                                                                                    • Figure 39: DirecTV online ad, May 2011
                                                                                                                  • TV presence
                                                                                                                    • Figure 40: DirecTV, television ad, 2011
                                                                                                                  • Print and other
                                                                                                                    • Figure 41: DirecTV email ad, May 2011
                                                                                                                  • Brand analysis: Dish Network
                                                                                                                    • Figure 42: Brand analysis of Dish Network, 2011
                                                                                                                  • Online initiatives
                                                                                                                    • Figure 43: Dish Network online ad, August 2011
                                                                                                                  • TV presence
                                                                                                                    • Figure 44: Dish Network, television ad, 2011
                                                                                                                  • Print and other
                                                                                                                    • Figure 45: Dish Network email ad, July 2011
                                                                                                                  • Telcos—push bundles, advanced offerings
                                                                                                                    • Brand analysis: Verizon (FiOS)
                                                                                                                      • Figure 46: Brand analysis of Verizon (FiOS), 2011
                                                                                                                    • Online initiatives
                                                                                                                      • Figure 47: Verizon (FiOS) online ad, July 2011
                                                                                                                    • Print and other
                                                                                                                      • Figure 49: Verizon (FiOS) email ad, April 2011
                                                                                                                    • Brand analysis: AT&T (U-verse)
                                                                                                                      • Figure 50: Brand analysis of AT&T (U-verse), 2011
                                                                                                                    • Online initiatives
                                                                                                                      • Figure 51: AT&T (U-verse) online ad, May 2011
                                                                                                                    • Print and other
                                                                                                                      • Figure 53: AT&T (U-verse) email ad, April 2011
                                                                                                                  • Subscription Status

                                                                                                                    • Key points
                                                                                                                      • Penetration marching forward
                                                                                                                        • Figure 54: Subscription to pay TV service, trended, May 2005–March 2011
                                                                                                                        • Figure 55: Pay TV subscription status, by household income, July 2011
                                                                                                                      • Reasons for not subscribing
                                                                                                                        • Figure 56: Reasons for not subscribing to pay TV, July 2011
                                                                                                                    • Attitudes Toward Pay TV

                                                                                                                      • Key points
                                                                                                                        • Promotions are strong means of attracting subscribers
                                                                                                                          • Figure 57: Attitudes toward pay TV subscription prices by household income, July 2011
                                                                                                                        • Cost sways, high-income pays
                                                                                                                          • Figure 58: Attitudes toward pay TV subscription prices by household income, July 2011
                                                                                                                      • Beyond Basic: PPV, VOD, DVR, and Premium Content

                                                                                                                        • Key points
                                                                                                                          • No content is too much content
                                                                                                                            • Whenever we want it: The rise of VOD and DVR
                                                                                                                              • Figure 59: Access to VOD, trended, July 2010-March 2011
                                                                                                                              • Figure 60: DVR penetration, trended, May 2005-March 2011
                                                                                                                              • Figure 61: Access to PPV, trended, May 2005-March 2011
                                                                                                                            • HBO: odd man out
                                                                                                                              • Figure 62: Premium channel subscription, trended, May 2005–March 2011
                                                                                                                            • Premium, VOD, PPV, DVR: Pocketbook affairs
                                                                                                                              • Figure 63: Premium channel subscription, July 2010-March 2011
                                                                                                                              • Figure 64: VOD subscription, July 2010-March 2011
                                                                                                                              • Figure 65: DVR penetration, by household income, July 2010-March 2011
                                                                                                                            • Age patterns suggest kids factor into DVRs
                                                                                                                              • Figure 66: DVR penetration, by age, July 2010-March 2011
                                                                                                                            • Cable gains against TiVO in DVR subs
                                                                                                                              • Figure 67: DVR provider, trended, May 2005-March 2011
                                                                                                                          • Attitudes Toward Advanced Features

                                                                                                                            • Key points
                                                                                                                              • It’d be nice, but…
                                                                                                                                • Figure 68: Level of interest in various pay TV services and likelihood of changing providers to get them, July 2011
                                                                                                                              • Higher income earners could go for more
                                                                                                                                • Figure 69: Which pay TV services do subscribers want? by household income, July 2011
                                                                                                                                • Figure 70: Interest in multiroom DVR functions, by household income, July 2011
                                                                                                                              • 44 and under interested, flexible
                                                                                                                                • Figure 71: Which pay TV services do subscribers want? by age, July 2011
                                                                                                                                • Figure 72: Interest in multiroom DVR functions, by age, July 2011
                                                                                                                                • Figure 73: Attitudes toward video on demand offerings by age, July 2011
                                                                                                                            • Plans to Change Service

                                                                                                                              • Key points
                                                                                                                                • One in four subs possibly up for grabs
                                                                                                                                  • Figure 74: Intent to cancel or change pay TV service, by age, July 2011
                                                                                                                                • Price drives interest in switching
                                                                                                                                  • Figure 75: Reasons for changing service by age, July 2011
                                                                                                                                • Satellites have strong pull
                                                                                                                                  • Figure 76: Brands under consideration for service among those changing providers by gender, July 2011
                                                                                                                              • Attitudes Toward Bundled Services

                                                                                                                                • Key points
                                                                                                                                  • Older consumers prefer convenience, while younger ones prefer to shop around
                                                                                                                                      • Figure 77: Attitudes toward bundled services by age, July 2011
                                                                                                                                    • Higher income consumers open to more, OK having others do it for them
                                                                                                                                      • Figure 78: Attitudes toward bundled services, by household income, July 2011
                                                                                                                                    • Access is an issue for rural consumers
                                                                                                                                      • Figure 79: Attitudes toward bundled services by urban status, July 2011
                                                                                                                                  • Impact of Race and Hispanic Origin

                                                                                                                                    • Key points
                                                                                                                                      • Asians and Hispanics exhibit greatest interest in pay TV advances
                                                                                                                                        • Figure 80: Level of interest in various pay TV services and likelihood of changing providers to get them, by race and Hispanic origin, July 2011
                                                                                                                                      • …while whites are more inclined to take the easy route
                                                                                                                                        • Figure 81: Attitudes toward bundled services by race and Hispanic origin, July 2011
                                                                                                                                    • Custom Consumer Groups

                                                                                                                                      • Key points
                                                                                                                                        • Empowering singles to take charge
                                                                                                                                            • Figure 82: Length of time without subscription by marital/relationship status, July 2011
                                                                                                                                          • Keeping costs in check for households with kids
                                                                                                                                              • Figure 83: Length of time without subscription, by presence of children in household, July 2011
                                                                                                                                            • When your schedule is not your own
                                                                                                                                              • Figure 84: DVR penetration, by presence of children, May 2005-March 2011
                                                                                                                                              • Figure 85: Interest in multiroom DVR functions, by presence of children, July 2011
                                                                                                                                            • Simplify my life, please
                                                                                                                                              • Figure 86: Pay TV services currently used, by household size, July 2011
                                                                                                                                              • Figure 87: Pay TV services would like to have, by household size, July 2011
                                                                                                                                            • VOD important with KIDS
                                                                                                                                              • Figure 88: Attitudes toward video on demand offerings, by presence of children in household, July 2011
                                                                                                                                          • Cluster Analysis

                                                                                                                                              • Apathetic Savvy Shoppers
                                                                                                                                                • Demographics
                                                                                                                                                  • Characteristics
                                                                                                                                                    • Opportunity
                                                                                                                                                      • Disengaged Older Adults
                                                                                                                                                        • Demographics
                                                                                                                                                          • Characteristics
                                                                                                                                                            • Opportunity
                                                                                                                                                              • Amicable High Rollers
                                                                                                                                                                • Demographics
                                                                                                                                                                  • Characteristics
                                                                                                                                                                    • Opportunity
                                                                                                                                                                      • Cluster characteristic tables
                                                                                                                                                                        • Figure 89: Pay TV clusters, July 2011
                                                                                                                                                                        • Figure 90: Intent to cancel or change pay TV service, by pay TV clusters, July 2011
                                                                                                                                                                        • Figure 91: Attitudes toward bundled services by pay TV clusters, July 2011
                                                                                                                                                                        • Figure 92: Attitudes toward pay TV subscription prices, by pay TV clusters, July 2011
                                                                                                                                                                        • Figure 93: Interest in pay TV services, by pay TV clusters, July 2011 (Part 1)
                                                                                                                                                                        • Figure 94: Interest in pay TV services, by pay TV clusters, July 2011 (Part 2)
                                                                                                                                                                        • Figure 95: Attitudes toward video on demand offerings, by pay TV clusters, July 2011
                                                                                                                                                                        • Figure 96: Pay television service provider, by pay TV clusters, July 2011
                                                                                                                                                                        • Figure 97: Positive vs. negative brand perceptions, by pay TV clusters, July 2011 (Part 1)
                                                                                                                                                                        • Figure 98: Positive vs. negative brand perceptions, by pay TV clusters, July 2011 (Part 2)
                                                                                                                                                                      • Cluster demographic tables
                                                                                                                                                                        • Figure 99: Pay TV clusters, by gender, July 2011
                                                                                                                                                                        • Figure 100: Pay TV clusters, by age, July 2011
                                                                                                                                                                        • Figure 101: Pay TV clusters, by household income, July 2011
                                                                                                                                                                        • Figure 102: Pay TV clusters, by race, July 2011
                                                                                                                                                                        • Figure 103: Pay TV clusters, by Hispanic origin, July 2011
                                                                                                                                                                        • Figure 104: Pay TV clusters, by education, July 2011
                                                                                                                                                                        • Figure 105: Pay TV clusters, by employment, July 2011
                                                                                                                                                                        • Figure 106: Pay TV clusters, by presence of children in household, July 2011
                                                                                                                                                                      • Cluster methodology
                                                                                                                                                                      • Appendix: Other Useful Consumer Tables

                                                                                                                                                                          • Figure 107: Use of pay television service provider by region, July 2011
                                                                                                                                                                          • Figure 108: Brands under consideration for service among those changing providers by urban status, July 2011
                                                                                                                                                                          • Figure 109: Frequency of PPV usage, by age, July 2010-March 2011
                                                                                                                                                                          • Figure 110: Frequency of PPV usage in past year, by household income, July 2010-March 2011
                                                                                                                                                                      • Appendix: Trade Associations

                                                                                                                                                                        Companies Covered

                                                                                                                                                                        • Advanced Television Systems Committee
                                                                                                                                                                        • American Association of Retired Persons (AARP)
                                                                                                                                                                        • Blockbuster USA
                                                                                                                                                                        • Charter Communications, Inc.
                                                                                                                                                                        • Cox Communications, Inc.
                                                                                                                                                                        • DreamWorks Animation SKG Inc.
                                                                                                                                                                        • ESPN, Inc.
                                                                                                                                                                        • Federal Communications Commission (FCC)
                                                                                                                                                                        • Home & Garden Television
                                                                                                                                                                        • Home Box Office, Inc.
                                                                                                                                                                        • Microsoft USA
                                                                                                                                                                        • Motion Picture Association of America
                                                                                                                                                                        • National Broadcasting Company, Inc. (NBC)
                                                                                                                                                                        • 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
                                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                                        • Verizon Communications Inc.

                                                                                                                                                                        Pay TV - US - October 2011

                                                                                                                                                                        £3,199.84 (Excl.Tax)