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Channels No Longer a Premium

Jul 28, 2003  •  Post A Comment

Subscribers to direct broadcast satellite services want more movies but fewer premium channels.
That is the seeming paradox in an unreleased industry study, which showed that subscriber interest in lucrative premium subscriptions continues to decline. In 2000, 59 percent said they were premium-channel subscribers. That number fell to just 47 percent in 2003.
The falloff is even greater among those who have had DBS service for fewer than three months. That subset has dropped from 62 percent who were premium-channel subs to just 43 percent in 2003.
The annual DBS Subscribers Study was commissioned by the Satellite Broadcasting and Communications Association and administered by the Taylor Research and Consulting Group.
Interest in various programming genres is relatively stable from year to year, according to the study, with movies again by a wide margin topping the list of pay-per-view genres that subscribers are interested in ordering. Movies also come in third (after news/information and documentaries) in channel types DBS-subscriber respondents say they most watch.
Premium channels in recent years have focused on touting their own must-see original programs-most notably HBO’s “The Sopranos” and its other Emmy-magnet critical hits-but movies are still the driver of the premium category, the study confirms.
People in the study say they want more movies, said David Charmatz, senior VP of research, analysis and strategy at Starz Encore Group, who spoke to TelevisionWeek about the soon-to-be-released study in his capacity as chairman of the SBCA Research Committee. “It’s somewhat of a paradox, the fact that they want more movies and they’re buying less premium. Either the perception is that there are less movies on premium, or the fact that the marketers on the distribution side are spending less time on selling premium and its movie content.”
The study also found that movies continue to dominate pay-per-view usage for nearly all DBS-subscriber population segments, with 86 percent of PPV users overall watching movies, though both urban and Hispanic households-at 75 percent and 64 percent, respectively-watch PPV movies at somewhat lower rates than other population groups.
The study concludes that “high rates of PPV movie usage among users of premium services suggest opportunities to package premium and PPV services in ways that will promote use of both services,” and that the decline in premium subscribers, “combined with continuing high interest and usage of movies, suggests a need to integrate premium services into standard programming packages.”
All or the Minimum
One of the key industry changes that the study documents is the continuing trend away from premium, Mr. Charmatz said. “Sell-through of premium, that’s one change.”
Among the reasons that premium subscription rates have been falling are “price point,” content and how people look at the “choice vs. price value” proposition, Mr. Charmatz said.
Some people “want everything,” he said. “Other people, whether they have the wherewithal [or not], will buy the bare minimum. … When it comes to buying premium, it comes down to how does it fit into their psychographic of what they want in the home”
The study was conducted by telephone interviews of 1,500 DBS households, divided evenly between DirecTV and EchoStars subs and between new (less than three months) and current subscribers.