Pay-TV subscribers want smaller, cheaper bundles, survey finds

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Posted: Saturday, October 19, 2013 12:00 am

Almost three-quarters of pay-TV subscribers would like to purchase slimmer, customized TV bundles — mostly because they believe it would lead to lower bills, according to a consumer survey.

At the same time, subscribers accept the pay-TV model and are consuming soaring amounts of entertainment through smartphones, tablets and video services such as Netflix.

“We are seeing outlandish consumption, and that is good for the industry and good for the consumer,” said Joe Atkinson, the market advisory leader in Philadelphia for PricewaterhouseCoopers LLP, which conducted the survey.

Among those respondents in the survey who said they would like a more customized TV bundle, 62 percent said they were willing to pay up to $2.99 per channel a month, while 26 percent said they would be willing to pay from $4 to $8 a month for a channel.

The TV-distribution industry, which includes Comcast Corp., says subscribers would pay more and get less entertainment if channels were sold individually or in smaller bundles.

But there is a growing recognition of, and discontent with, bundles that carry costly programming that many don’t view — sports being a prime example. Most customers’ bills have a high percentage of costs resulting from sports programming, even if those channels are rarely or never accessed.

A study earlier in the year by Laura Martin of Needham & Co. LLC in Boston said ESPN could cost $30 a month if it were sold separately. ESPN is expensive because of the tens of billions of dollars it pays for TV sports rights.

Martin noted that the Canadian government has said it will attempt to unbundle TV channels as policy. But she doesn’t see that happening in the United States, partly because of political gridlock in Washington.

“You don’t maximize consumer choice by unbundling,” Martin added.

TV executives talk about the “cord-never” generation of young adults who are skipping traditional TV services altogether.

The PricewaterhouseCoopers survey, though, showed that younger adults who paid for cable- or satellite-TV services also were likely to augment their entertainment options with Netflix or other Internet-based services.

Fifty-six percent of those between the ages of 18 and 24 with a pay-TV subscription also watched a video service. Only 19 percent of customers 50 to 59 subscribed to more than one video service.

Comcast, the nation’s largest cable company, is talking with Netflix and other video providers about applications that could be loaded onto its new X1 set-top box.

Netflix is the biggest of the Internet services. Other commonly accessed entertainment sites were TV networks, Hulu, Amazon Prime and iTunes. Comcast has said the talks with Netflix are preliminary and it could eventually come to terms with another service.

In addition to multiple video services, TV subscribers are consuming more entertainment and news through phone and tablet “second screens.”

Consumers remain willing to watch more advertising instead of being charged higher fees for channels, said Atkinson of PricewaterhouseCoopers. But as screens get smaller on smartphones and tablets, consumer tolerance for advertising diminishes, he warned.

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