Video services

TV Should Be $38 Per Month… Or Less

TV viewers in North America are willing to pay for a custom bundle of television channels, but no more than $38 per month.

That was the finding of video monetization specialist Digitalsmiths Corp. (which was bought by TiVo Inc. (Nasdaq: TIVO) in 2014) in the company's Q1 2015 Video Trends Report released today. According to a survey of more than 3,100 consumers in the US and Canada, viewers would like to pick and choose their subscription channels on an à la carte basis. However, with a target of 17 channels in a custom package, viewers also said on average that the most they would pay for the service would be a monthly fee of $38.

The finding on what consumers want in their television service bears little resemblance to what is actually available in the pay-TV market. Of the traditional channels available now or soon to be available on an individual basis -- notably CBS, HBO, and Showtime -- prices range between $6 and $15 per month. At that rate, viewers would only be able to bundle three to four networks together for the desired subscription price. (See Sony Promises à la Carte TV .)

Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.

It is reasonable to believe that more channels may become available at the lower end of the à la carte price range. In the Digitalsmiths survey, the top three networks consumers said they wanted were ABC, the Discovery Channel and CBS. Those channels likely wouldn't fetch the price of an HBO. But even at a low of $6 per month, viewers still wouldn't get anywhere near 17 channels at their preferred monthly rate.

Other interesting findings from the Digitalsmiths report:

  • Only 5% of consumers said they were planning to cut the cord in the next six months, but 32% said they were considering it. Many respondents also noted they would be more likely to stay with a pay-TV subscription if providers made it easier to find good content to watch. That conclusion runs similar to findings from a report released earlier this year by Amdocs Ltd. (NYSE: DOX). (See Amdocs: Pay-TV Can Play With OTT.)
  • Awareness of over-the-top video offerings is up overall, but Netflix still commands the greatest usage rates by far. More than 46% of respondents said they use Netflix, while Amazon Prime usage hovered around 19%, and usage of Hulu and Hulu Plus topped out a little over 11%. No other service managed rates above the 2% mark.
  • Most of the consumers subscribing to OTT services today spend between $6 and $11 per month. However, there's been a shift in the past year toward the upper end of that range. Spending in the $9-to-$11 category grew from just over 19% last year to nearly 22% in the first quarter of 2015.
  • In contrast to Netflix subscription rates, only 25% of respondents reported using their service providers' TV Everywhere apps, although that number is up from just over 21% a year ago. Less than half of users, just over 45%, said they use those TVE apps weekly.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

steve q 6/17/2015 | 10:38:43 PM
$38 Most people don't like the way today cable companies are charging . Customer are looking at the Internet and the smart tv with the ad of Netflix and apple tv. Maybe the best way the cable can keep the customer is move program to the cloud and then charge for a service to let more customers enjoy tv.
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