Research

Let’s Get Ready to Bundle

Study finds a la carte desire wanes as cost increases 3/24/2017 11:15 AM Eastern

Consumers want a la carte pricing for pay TV networks, but the number of channels they are willing to shell out for is relatively low, according to a recent study by Hub Entertainment Research.

In its latest studyLet’s Get Ready to Bundle – Hub Entertainment asked 1,500 broadband customers who watch at least 5 hours of TV a week which video bundle they would prefer, with more than half choosing an a la carte model that would allow them to pay for only those channels they want.

Respondents then were asked to create their own video bundle from a list of 77 brands, including pay TV and broadcast networks, subscription video on demand (SVOD) and premium services. On average, they picked 19 channels for their TV package, with 68% choosing at least one SVOD service in their bundle. Broadcasters were the most popular choices, led by ABC and followed by CBS, Fox and NBC.

According to Hub, when an appropriate monthly price was attached to each network -- $4-$7 for broadcast and basic cable networks, $8-$10 for premium networks, $10-$15 for SVOD and $20-$25 or sports networks – that list was pared dramatically. The study showed that more than 50% of respondents cut their list to 9 networks when pricing was introduced and the average viewer built a bundle worth $66 per month. In addition, 48% of respondents chose at least one SVOD provider, with Netflix the most selected brand.

“The current bundled-network approach to TV service gives consumers access to a fairly large number of networks they never watch, networks they assume they’re paying for,” said Hub principal and co-author of the study Peter Fondulas in a statement. “And in their mind, paying for something they don’t use is an instant sign of poor value. They instinctively see à la carte as an ideal solution, although in an exercise like this, they see that per-network prices can add up quickly—and severely limit their viewing choices.”

While the findings are similar to others that have found consumers want a la carte until they realize how much it would cost, the numbers do show growing consumer unrest with the existing model.

Only 38% of respondents said they found the current programming model – subscribing to tiers of programming and paying for channels they don’t watch – appealing.

“This research underscores what we’ve seen in other studies: it’s not the price of pay TV consumers object to, so much as how much of that price is going to content that they don’t use,” said Hub principal and co-author of the study Jon Giegengack in a statement. “This is an environment where SVODs—as aggregators with both original content and shows from other networks—provide especially good ‘bang for the buck’. So it’s interesting, but not surprising, to see so many consumers include them in the bundles they’d build themselves if they could.”        

 

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