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Study: TV Providers Not Threatened

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

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

[email protected]