Consumers Cutting Back On Premium Cable Service, Gadgets: Survey

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Six in 10 consumers intend to cut spending in at least one area of communications and entertainment this holiday season, but purchases of broadband access seems the least likely area for cuts, according to a survey by Oliver Wyman, an international management consulting firm.

If that consumer sentiment prevails through the next year, the drop in spending in the entertainment and communications segment could be in the 5% to 6% range, the company said. The survey was based on responses from 500 adults across the country.

Sales of home computers and laptops, music players and digital music players are most threatened as 50% of those polled said they would spend less on these devices next year. That equates to an overall 10% drop in sales, according to the consulting firm. However, there is still an appetite for next generation devices, including Blu-ray disc players, smartphones and high-definition television sets.

The firm advised against broad discounts, stating the amount of "on the fence" buyers that would be attracted would not be enough to compensate for losses from those who are inclined to buy at full price.

The good news for pay TV suppliers: 63% of the adults said they will spend about the same next year on broadband Internet access, mobile phone plans, pay TV and subscriptions to services such as Netflix. Only 28% said they would spend less, translating to a 5% drop in sales across the sector.

The research firm deemed that premium cable services are most vulnerable to a decrease in consumer spending, as 22% of those polled said they are somewhat likely to discontinue premium services in favor of basic cable channels.

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