Study Shows Consumers Consistently Watch Few Channels

May 09, 2014
By: Gary Kim

Executives in the linear video subscription business long have argued that although most people only watch a relative handful of channels, each individual watches a different pattern of perhaps seven to ten channels.

That sort of comment typically is used as an answer to questions about the great number of channels every consumer is able to receive, but never watches.

Historically, executives have defended the practice of bundling hundreds of channels together as providing the best value for consumers, since the precise mix of viewed channels varies from person to person.

Wide distribution helps a distributor, at least theoretically, because the large potential audiences allow the distributor to sell advertising that defrays part of the cost of the end user service.

Under those circumstances, prices are lowest for consumers when distributors can aggregate a wide variety of channels and then allow consumers to pick and choose what they want from the bundle.

Distributors likely have more mixed views about bundling these days, since the largest content owners routinely require that distributors agree to carry lightly-viewed channels in order to gain access to the “must have” channels.

That can raise costs for distributors, who then pass the higher costs along to customers. But customer resistance to high prices is growing.

So, linear video providers are warming to the idea of offering stripped-down packages of channels that cost less and might appeal to consumers increasingly uninterested in spending $80 to $100 a month for a subscription.

Contracts might well prevent most suppliers from doing anything too interesting, in the near term, as standard programming contract clauses stipulate that a given channel has to be carried on the “most widely viewed” service tier.

The typical U.S. home now receives 189 TV channels, but consistently watches 17 channels, according to Nielsen.

If one assumes a typical household size of about 2.5 persons, the latest data is not inconsistent with older rules of thumb that suggest any single viewer consistently watches about seven channels.

Another study found that viewers watch about 10 channels.

As recently as 1995, the typical household routinely watched about seven channels. Keep in mind that is routine watching by the whole household, not by discrete individuals in the household.

TV users who watch lots of TV might watch 27 channels routinely, but lighter viewers only about four channels.

In an indirect way, that historic pattern explains why firms such as Dish Network are considering launching over the top linear video packages that contain far fewer key channels, allowing a service to be priced somewhere between $20 and $30 a month, and primarily aimed at consumers unwilling to pay $80 to $100 for traditional subscription video packages.


 




Edited by Stefania Viscusi