TV viewers across the country are adopting digital cable and satellite, with penetration rates approaching 40 percent of multichannel households, Horowitz Associates Inc. president Howard Horowitz said last week.
But to get to the next level of penetration, "digital cable has to offer something new" beyond more channels and an interactive programming guide, Horowitz added.
Features such as video-on-demand, subscription VOD and digital video recorders can help drive recent subscriptions to digital cable, according to results of a Horowitz Associates study released last Wednesday.
For its State of Digital and Interactive Television
report, the research firm surveyed 805 cable and satellite television customers in markets where digital cable is available. Of those polled, 25 percent subscribe to digital cable, and another 17 percent said they were likely to subscribe to digital cable.
In the study, 43 percent said a VOD service offering older titles for $1 to $2 per movie would increase their likelihood of buying digital cable or upgrading to a more robust digital cable package. And 41 percent said a VOD service that charges $3.95 per movie would also increase their likelihood to subscribe or upgrade.
When the Horowitz survey asked consumers if they would be interested in paying $4 extra per month for SVOD basic programming or $6 extra per month for SVOD premium services, 28 percent and 25 percent, respectively, said yes.
The study suggests that at least some consumers would be willing to pay a premium for other new digital cable products, including video games and a la carte sitcoms and do-it-yourself videos.
While the study indicates that direct-broadcast satellite providers could be at risk of losing customers to digital cable, the survey did not specify which providers were in a better position to offer VOD or SVOD to their customers.
"We usually don't editorialize in the surveys," Horowitz said.
One half of digital cable and direct-broadcast satellite customers said a DVR device for $6.95 per month would appeal to them.
Currently, DirecTV Inc. customers pay a monthly fee for DVR service from TiVo Inc., but EchoStar Communications Corp.'s Dish Network customers pay no monthly fee for the company's own digital video recording service.
Digital cable customers and DBS subscribers show a higher level of interest in Dolby Digital 5.1 surround sound through their set-top box than the overall cable population. They also demonstrate a greater interest in DVRs, VOD and high-definition television.
Horowitz said that as television viewers become accustomed to their new digital services, "we have to address the geography of the television household." He explained that it's not enough to deliver one digital set-top box to each subscriber.
"Digital compatible devices have to be ubiquitous in the home," he said.