March 9, 2009

With money tight and the economic pall enduring, cable ops have been forced to recognize the importance of service pricing. This issue is prevalent and perhaps most salient in the broadband arena, where consumers are gravitating toward the Web for free access to TV content and/or to watch their favorite content at suitable times.

In response, MSOs such as Comcast and Time Warner Cable have devised initiatives to make TV content available online. Comcast's OnDemand Online service, for example, will go live as soon as this year, and Time Warner Cable's TV Everywhere seeks to make cable programming available across PCs and mobile devices.

In order to preserve the bread-and-butter pay TV model, the initiatives will restrict online access to existing linear subs, and Time Warner Cable’s positioning its own as a free value add. But there’s no word on Comcast’s planned pricing (if any), and as content distributors/owners grapple with the imperative of online video provision the worth consumers would assign to such services bears noting.

Enter recent data from The Diffusion Group, which show that 16% of pay TV subs who spend more than $100/month for TV service are willing to spend an additional $20/month to have their linear programming delivered to their PCs. The percentage drops to 9%, however, when related to subs that spend less than $50/month for TV service. Slash the 2-screen price to $2.50/month, though, and more than one-fourth of the $100 spenders would opt for the service, as would 14% of the $50 group.

Cable must be heartened that a decent measure of subs are willing to pony up extra cash for Internet access to TV content, yet a tad forlorn that an appreciable drop in the monthly cost failed to produce a similar bump in demand. Perhaps consumers have become too conditioned to free Web content to abide any extra fee. The disparate numbers among the 2 sub groups, meanwhile, is understandable when based on the assumption that people paying $100/month for cable/satellite are better off financially than those paying half that amount.

Price aside, what other factors will most affect customer adoption of new Web content services? The Diffusion Group posits that “a single branded offering that dishes up your favorite TV content to any of your video-enabled devices, all with one bill and one point of customer contact” will be the most effective tack.