Direct-broadcast satellite companies continue to be more successful at selling their video services to African-American and Hispanic households than cable providers, according to two recently released studies focusing on ethnic markets.
“Focus: African-American,” a study from the Surveys Unlimited division of Larchmont, N.Y.-based Horowitz Associates, indicates that those households continue to be among cable’s best customers. But in the study, based on a survey of 500 African-American heads of households, results indicated that there is a high risk of churn in the sector.
These households have traditionally been big spenders on video services, paying an average of $58.17 per month for services, compared to the industry norm of $54 per month. In digital households, the sector spends $66.74 monthly on cable, compared to an industry average of $64.36, according to the study. Among current satellite subscribers, African-American households spend $63.70 a month, versus $56.73 spent by other urban satellite users.
In response to questioning, those heads of household indicated a higher intent to switch providers than in the past. That could mean an increase of penetration among African-American homes of 22% in the near future, compared to the current estimate of 16%. That would result in cannibalization of digital-cable penetration in those urban households, dropping the rate to 23% from its current level of 30%.
A clue to the potential switch may be found in the broadband use responses. More consumers interested in high-speed Internet connections indicated they were considering DSL service, a product which is heavily promoted in packages bundled with discounted DBS services. But there is room for growth for all providers: Internet penetration is estimated to grow from 45 % to 62% in African-American homes, while high-speed use should grow from the current 28% to 46%, based on “likely purchase” questions in the survey.
A study prospectus is available at http://horowitzassociates.com/faapro.pdf.
Hispanic households remain an under-served market, according to a different survey by the Total TV Audience Monitor (www.totaltvmonitor.com). The fall 2005 report, released this month, indicates that 26 million Hispanics watch TV in an average week, and 71% of that time is spent watching broadcast. By contrast, non-Hispanic males spend 58% of their time watching broadcast, and non-Hispanic women spend 62% of their time viewing that medium.
Hispanic adults are less likely to buy or use digital video recorders or video on demand, according to the survey.But they subscribe a little more to satellite television than non-Hispanics (25% penetration v. 24% in non-Hispanic households) and buy slightly more premium satellite-delivered services (32% v. 31%).