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Pay TV's Perceived Value In Decline

I don’t have a problem paying for cable TV. Yet.

The mix of sports, kids’ shows, and news is well worth paying for every month, as it is for millions of others. There’s no way to get anything close to that full complement of news and entertainment without subscribing to cable, satellite or telco TV… yet.

The phenomenon of people canceling pay-TV service because they’re able to satisfy their video diet via broadband is in its infancy. (See Breaking Free, Nov. 1, 2008.)

Check this out: Americans have never been more glued to their (traditional) TVs, watching an average 151 hours of television per month in Q4 2008 (Nielsen). Average!

But remember when music delivery over the Internet was just taking off? Perhaps you still buy music CDs. Many people, especially younger ones, don’t. And CD sales have been falling faster than digital music sales are increasing.

Kaan Yigit, analyst for Solutions Research Group in Toronto, sent the following results of his firm’s latest customer survey of about 1,200 U.S. cable and satellite customers.

Over the course of 2008, according to SRG, those who agree or strongly agree that pay-TV is a good value has dropped — from 48% in Q1 to 45% in Q4. Perhaps more significant, 31% of respondents in the most recent period answered in the negative vs. 24% in the first quarter. (Evidently more people have opinions on the matter: “Don’t know” responses were 8% in the earlier period, compared with 1% in Q4.)

“Television service from my satellite/cable provider is good value for the money”

Source: SRG

What could explain these results? The swelling amounts of on-demand Internet video could be one factor — it’s far more convenient than traditional TV — along with price hikes.

In Yigit’s view, pay-TV providers could learn from what happened to the music industry.

He claims that in 1998, SRG, based on its primary research, was telling major record labels about consumer frustration with the industry’s value proposition (i.e., feeling they were forced to buy a “bundle” of songs on a CD, most of which they didn’t want). The music industry in 1998 had one of its best years — and then Napster showed up two years later, then iTunes… and CD sales have been declining ever since.

Some argue that music and TV are different in critical respects. Music is portable, short-form and bears repeated listening. TV is (or has been) tethered to the screen in the living room; you typically watch a piece of TV content once or twice; and it’s 22 minutes or longer.

Valid points, but cable operators cannot feel complacent. And they don’t: The still-unformed plans by Comcast, Time Warner Cable, Cox and others to create an “on-demand online” walled garden of TV content is a clear response to growing consumer demand for getting video wherever/whenever/however. And, the hope is it will be a lagniappe that cuts down defections to satellite and telco TV services.

Within reason, it’s a valuable trait to be paranoid.