Study: TV Providers Not Threatened

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New York - A "vast majority" of consumers intend to continue using their current subscriptions to cable, satellite and telco TV services, despite the growing use of alternative video platforms on the internet, a new

Frank N. Magid Associates

consumer study has found.

The market research firm countered general industry assumptions that the growing use of alternative video services would reduce consumer dependency on more traditional multichannel video providers.

"On the contrary, Magid's new study, `2010: The New Age of Video Entertainment,' uncovers several consumer behaviors that should persuade the industry to take a second look at earlier defection forecasts," the group said.

Among the findings in the study were the following:

  • Consumers using the greatest number of alternative platforms also tend to spend the most money on traditional subscription services. "The study shows that alternative video viewing platforms should be considered additive to traditional subscription television," Magid said.
  • Only 10 percent of consumers express an interest in trying TV show and movie viewing from the Internet to a computer or tablet screen. In contrast, interest surges in viewing this content on a TV screen via a computer connected to the Internet, and it climbs even higher for devices designed specifically to stream content to the TV (such as AppleTV and Roku).

"The average American's capacity to consume video content is impressive," stated Maryann Baldwin, Magid media futures VP. "As new video-viewing platforms such as instant streaming and mobile apps proliferate, consumers are simply adding them to their portfolio of video viewing options. Our research indicates that this is definitely not a zero-sum game -- at least at this point, it appears that traditional subscription services and alternative viewing platforms can coexist with services like 'TV Everywhere' locking in revenues for traditional providers."

In fact, only a very small minority of consumers are even considering canceling their subscriptions, the study found.

This assumption was determined by the following indicators:

  • Only 1 percent of consumers report that they have canceled their subscription service in favor of accessing content available on the Internet, and only 2.5 percent of consumers use Internet content exclusively.
  •  In terms of future cancellations, only 3 percent of consumers report that they are even considering canceling their traditional subscriptions without replacing it with a competing subscription, suggesting a relatively stable subscriber base for traditional providers.
  • Purchase and rental of DVDs continue to be most at risk from the growth in use of alternative video viewing platforms.

As for 3D TV adoption, Magid's study showed the following:

  • Eight percent of consumers are very likely to purchase a 3D TV in the next 12 months. To provide context, in the early days of HD adoption, Magid found that 8 percent to 10 percent of consumers said they were very likely to purchase a HD television, while annual adoption reflected only 4 percent to 5 percent growth. Should this pattern repeat, Magid predicts that roughly 5 percent of households will have a 3D television by the fall of 2011.
  • There has been no change since late 2009 in the proportion of consumers who feel it is important that there is more 3D content. This suggests that the growth in purchases of 3D television sets will not be driven by consumers' interest in accessing 3D content; instead, the bundling of HD television sets with 3D capabilities presents a more likely short-term growth scenario for 3D adoption.

Magid said the online survey was conducted in October 2010 using a nationally representative sample of 1,208 adults age 12 years or older.

New topics of exploration this year included the first measurement of intent-to-purchase 3D television sets. Other new topics include use of nearly one dozen alternative TV show and movie viewing platforms both at home and out-of-home, and interest in TV Everywhere-style services from cable and satellite.

The full report is available for $6,000 by contacting Julie Zipperer at (319) 377-7345 or

jzipperer@magid.com

.

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