Wednesday, June 17, 2015

Consumers Say They Want to Pay $2 Per Channel, and No More than $38 a Month for Entertainment Video

Surveys of consumer preferences for some products are notoriously out of step with actual consumer behavior. So it is with consumer sentiments about video entertainment.

According to a survey of more than 3,100 consumers in the United States and Canada, respondents preferred buying channels on an à la carte basis. That should come as no surprise: choice is a powerful consumer impulse.

On the other hand, consumers also indicated they would pay no more than $38 for 17 channels, in other words, about $2 a channel, according to the Digitalsmiths Corp. Q1 2015 Video Trends Report.

In the Digitalsmiths survey, the top three networks consumers said they wanted were ABC, the Discovery Channel and CBS. Really? That reminds some of us of the surveys taken over decades that showed surprisingly high interest in public broadcasting stations that never seemed to match actual behavior.

That noted, the success enjoyed by Netflix could offer any number of suggested implications. Consumers clearly are willing to pay about $8 a month for streaming access to a wide variety of TV shows and movies. But how much more they are willing to pay for is the question.

More than 46 percent of respondents said they use Netflix, while Amazon Prime usage hovered around 19 percent. Hulu and Hulu Plus were viewed b about 11 percent of respondents.

Most of the respondents who reported they buy over the top streaming services spend between $6 and $11 per month. Many of us would consider that a likely floor, rather than a ceiling.

Spending in the $9-to-$11 category grew from just over 19 percent in 2014 to 22 percent in the first quarter of 2015. In other words, there seems to be demand for higher spending, if providers can create the right packages.

At question, though, is appetite for large packages of “channels.” Consumers might, or might not, continue to value “big bundles” of channels, compared to less-expensive smaller bundles, in the future.  

Cablevision Systems Corp., for example, appears to believe it could well lose 20 percent to 25 percent of its basic cable subscribers--those buying its standard “big bundles”--in about five years. Those customers might choose rival over the top streaming services or downgrade to smaller bundles.

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