CABLE READY OR NOT: PREDICTING LIKELY
SUBSCRIBERSHIP TO A 500 CHANNEL SYSTEM
Larry Collette
Department of Radio-Television
Assistant Professor
[log in to unmask]
and
Shufei Kime
Telecommunication Program
Graduate Student
both at
Southern Illinois University
Department of Radio-Television
Carbondale, IL 62901-6601
(618) 457-6905
Submitted for consideration to the Communication Technology and Policy
Division of the Association for Education in Journalism and Mass
Communication, April 1, 1995
Cable Ready or Not: Predicting Likely
Subscribership to a 500 Channel System
ABSTRACT
This paper examines consumer responses to the concept of a 500 channel
cable system within a community where a digital, high capacity system
is
scheduled to be deployed in the near future. Telephone interviews
were
conducted with 222 adults regarding their attitudes toward 500 channel
systems, pricing issues, personal innovative tendency, and a variety of
demographic factors.
Preferences in terms of price and various billing options were explored
and are reported within this study. Differences were also discovered
in
orientations toward a 500 channel cable system between cable and
non-cable
respondents. Finally, a regression model was created to predict
desire to
subscribe to a 500 channel cable service. The resulting model
determined
that attitudes toward 500 channel systems, current cable subscription,
TV
use, and age were the best predictors of a desire to subscribe. These
findings are discussed within the context of the changing media
environment
in which cable systems will operate.
Cable Ready or Not: Predicting Likely
Subscribership to a 500 Channel System
Perhaps one of the more dearly held tenets of our consumer society is
that an increased amount of a good thing is in itself a good thing.
Yet,
economists assert that as a person consumes more and more of a
particular
commodity, there is a point beyond which there is a decline in the
extra
satisfaction derived from the last unit of the commodity consumed
(Mansfield, 1984). Thus, the marginal utility curve of any commodity will
fall as a result of this law of diminishing marginal utility. This
economic
concept is especially intriguing in light of the information future and
consumer adoption of communication technologies. When faced with a
profusion of information and entertainment options, how will the in-home
consumer react to that 101st or 404th choice in a 500 channel
universe?
The hyper-escalation of cable systems from their current average of 40
channels-per-system to tomorrow's 500+ channel environments will make
such
questions increasingly relevant.
While the future promises an exciting world of virtually unlimited
entertainment choice with the marriage of computing power, high capacity
telecommunication circuits, and other technical advances (Gilder,
1992;
Dizard, 1994), outside of proprietary circles, precious little is known
concerning how users will greet this information/entertainment boom.
The
arrival of this revolution of enhanced choice options for the consumer
gives one pause to ask: "what will people be willing to pay for?" or in
the
language of the day, "who will demand this video?" Both the behavioral
patterns of cable subscribers and the decisions surrounding
subscribership
are likely to be affected by this dramatic technological change.
The cable industry, with its tradition of mostly one-way entertainment
delivery, has fashioned a nameplate in the so-called 500 channel cable
system.[1] The industry's vision of the future consists largely of
expanded
delivery capacity through use of digital compression technology and
fiber
optic distribution systems which ultimately give consumers increased
arrays
of programming options (National Cable Television Association, 1992).
Compression techniques will allow downloading of content in seconds and
when combined with fiber's bandwidth capacity, tens of thousands of
requests will be handled simultaneously with little delay given adequate
switching capability. This is leading cable companies to commit to
investments in digital compression technology which will allow the
equivalent of 500 to 1000 channels into every home (National Cable
Television Association, 1993). Once capacity restrictions have been
removed through system upgrades of aging cable plants, incumbent cable
companies are favorably positioned to deliver these huge numbers of new
channels to consumers. Over the next 10 years the industry will spend
$14
billion to upgrade 75 percent of the existing systems in the United
States
(National Cable Television Association, 1993). Though the growth in
channel offerings will likely be incremental, this actually reflects a
lack
of available program services (software) and not limitations of the dist
ribution technology itself (hardware).
In April of 1994, Telecommunication Inc. (TCI) announced its "first phase
deployment" plans to upgrade the distribution plants in 23 of its
service
areas (Pierce, 1994). Coupled with its National Digital Television
Center
which will digitize analog TV signals and distribute them to the cable
headends, these upgrades will represent a sharp increase in channel
capacity to within that 500 channel range. As such, the communities
selected will be among the first to experience the 500+ channel cable
environment. One of the 23 communities chosen for this upgrade was a
small
rural midwestern town with a current base of about 2,300 cable
subscribers.
A random sample drawn from that community population is the focus of the
present survey research. The purpose of this exploratory study is to
assess the general perception of the value and possibilities of a 500
channel system in an area where the technology is to be rolled out first.
In doing so, it will also identify those types of persons most likely
to
subscribe to these new systems.
Literature Review
Diffusion Research
Diffusion research is the study of the social process of how
innovation (new ideas, practices, objects, etc.) becomes known and spread
throughout a social system (Rogers, 1983). The research into
diffusion
goes well beyond 3,000 articles and books, therefore, the reader will
be
spared that exercise here. Yet, there are certain distinctive
qualities of
new media that lead us to expect their diffusion to differ from that
generally found for other new ideas (Rogers, 1986). Concerning new, or
developing technologies, the primary focus has appropriately been placed
on
their critical mass nature, re-invention, and those issues related to both
implementation and use. For example, earlier adopters of new media tend
to have high socioeconomic status, different communication behavior,
greater empathy, less dogmatism, and more rationality when compared with
later adopters (Rogers, 1986). Furthermore, the earlier adopters for
certain technologies tend to be younger in age, mostly male, and display
greater affinity for technology in general.
Danko and MacLachlan (1983), while focusing upon the acceleration of
diffusion in new inventions, highlighted that an innovation can change
to
give it a broader appeal, and there are ways in which to give
direction to
that change. In the same vein, cable--a technology developed in the
1950s--will be greatly reshaped by the proliferation of new channels,
marking the onset of innovation.
The difficulties that one encounters in forecasting the adoption of
new media are fairly well known (Klopfenstein, 1988). These problems
range
from a failure to consider competing social factors to an over-reliance on
unstable models. The classic problem faced in predicting consumer-intent
in light of new technologies is that surveys often require people to
assess
likelihood of adopting something that doesn't exist. John Carey (1993)
suggests that this is roughly equivalent to asking a person "would you
buy
a flying dog?" Yet, even though 500 channel cable systems are not
presently available, the concept of cable television is fairly well
established and familiar to most people. Also, many of the present cable
program services can be expected to be reasonably analogous to future
offerings on new systems (Zoglin, 1993). At the same time, 500 channels
does represent an innovation, therefore, people's adoption of it
remains
uncertain. This is especially true as prices rise to cover capital
costs
of system upgrades and new pricing structures are needed. These 500
channel
services can clearly go beyond existing communication services to offer
new, alternative applications and choices for cable subscribers.
Sparkes and Kang (1986) suggested that judgement of compatibility and
relative advantages associated with cable are the most important issues
in
personal decisions whether or not to adopt the technology. Economists
speak of this as the "utility" attached to any purchase decision which
becomes an important criterion for action (Clower,Graves, and Sexton,
1988). People will find advantage or utility in cable subscription if it
possesses attributes regarded by them as valuable. This is in general
agreement with logic models of consumer behavior which assume that
consumers confronted by two alternative choices or "market baskets" (e.g.
cable or no cable) can decide if they prefer the first to the second,
the
second to the first or are indifferent among the two. The
expectancies
(perceptions) that a potential buyer/user has for a particular service
or
good contribute in large part to that subsequent decision (Edwards,
1954).
Importantly, Ostlund (1974) found that the perception of an innovation
by
its potential adopters can be a stronger predictor of acceptance than
simply those personal characteristics of the adopter alone. Thus, the
attitudes one holds toward a 500 channel cable system can play an
important
role in shaping desire to subscribe (or not) and will coexist with other
person-related factors. For example, we might suspect that
perceptions of
viewing decisions being made too arduous with 500 channels may have a
negative impact on the desire to subscribe.
Demographic Factors in Cable Subscribership
Coinciding with the impact of the first cable revolution, a variety of
studies were done that analyzed cable subscription and its relationship
to
demographic variables (Agostino, 1980; Sparkes, 1983; Webster, 1983;
Collins, Reagan, and Abel, 1983; Donohue, Cook, and Cheung, 1984;
Metzger,
1983). The results of these studies were at times conflicting. For
example, Collins, Reagan, and Abel (1983) reported that cable
subscribership was not related to age. While, Krugman (1985) suggested
that
cable subscribers were younger than non-subscribers. Ducey, Krugman, and
Eckrich (1983) found that pay cable subscribers were younger than
basic
subscribers, and indicated a strong preference for the pay service in
that
they subscribed to basic cable in order to receive pay services.
LaRose
and Atkin (1988) later found that age had no impact on intention to
discontinue service.
The findings regarding income's relationship to cable subscription were
also inconsistent among studies. While Donohue, Cook, and Cheung
(1984)
found that higher incomes were a predictor of subscription, Collins,
Reagan, and Abel (1983) reported that lower incomes better predicted cable
subscription. Heeter and Greenberg (1988) did find cable subscribers
to
have higher incomes and more children than non-cable subscribers.
While
Agostino (1980) found that income itself had little bearing on
predicting
cable subscription. As for education, Krugman (1985) found that
higher
levels of education and cable subscription were positively correlated,
while Sparkes (1983) suggested an inverse relationship, as those with
lower
education levels were more likely to subscribe.
Cable and Non-cable Households Differences
A good deal of research tends to confirm that non-cable and cable
households do differ in a variety of ways (Rothe, Harvey, and Michael,
1983; Greenberg, Heeter, D'Alessio, and Sipes, 1988). That time spent
watching television increases with cable subscription is probably the
less
contested finding associated with cable TV behavior (Becker, Dunwoody
and
Rafaeli, 1983; Nielsen, 1993). Cable subscribers not only watch more
television than non-cable subscribers but were more likely to own a VCR
and
computer than non-cable subscribers (Heeter and Greenberg, 1988). This
suggests that cable subscribers exhibit a greater tendency to adopt
other
electronic technology too. Likewise, cable subscribers tend to be
greater
users of media in general.
Sparkes (1983) compared cable subscribers and nonsubscribers on a variety
of behavioral and attitudinal measures across time. His findings
highlighted the attitudinal differences between the two groups when it came
to cable service. Sparkes and Kang (1986) further studied attitudinal and
behavioral changes that arose from direct consumer experiences with cable.
Consumer attitudes changed from naive enthusiasm, through disappointment,
to modified appreciation when dealing with cable television but there was
little change in viewing behavior.
Method
Telephone interviews of approximately a twenty-minute duration were
conducted by trained interviewers over a two-week period in the Spring
of
1994. The survey population consisted of persons 18 years or older
living
within the dialing area of the community under study. A list of random
numbers was generated through use of the local telephone directory and
two-hundred twenty-two (n=222) useable surveys were collected.[2]
Research Questions
This project is guided by the following research questions: RQ1. How
much will people be willing to pay for a 500 channel cable service?
RQ2. What payment options would people prefer for a 500 channel cable
service?
RQ3. Do differences exist in the perceived importance of, attitudes
toward, and intention to subscribe to a 500 channel cable system between
those in cable and non-cable households?
RQ4. Can desire to subscribe to a 500 channel cable system be predicted by
(a) attitudes toward a 500 channel cable system,(b) innovative tendency,
(c) cable subscription, (d) television use, and (e) demographic
variables?
Research questions 1 and 2 are exploratory and aimed at gaining some sense
of consumer valuation of these future services. Question 3 assumes
that
differences in orientations toward 500 channel systems will emerge
among
cable and non-cable respondents. The anticipated differences are
expected
to result from those expectancies created via direct experience with
present cable service. In addition, differences may also be a product of
predispositions that have guided past decision-making regarding cable
serv
ice which are now being applied to 500 channel cable. The final
question
examines the degree to which desire to subscribe to a 500 channel
service
may be determined by attitudes toward these systems, innovative
tendency,
TV use, and demographics as has been suggested by prior research on
innovation and cable.
Questionnaire
The survey instrument was comprised of the following: a 15 item scale
measuring attitudes toward a 500 channel cable system (ATT500), a
9-item
scale measuring innovative tendency toward electronic technology
(INOVTECH), and items dealing with payment preferences for a 500 channel
cable system (See Appendix for scale items). Attitudes toward a 500
channel
system were based on responses to a series of statements such as "A 500
channel cable service would allow me to take better control over my
own
television viewing" and "Most people do not need 500 channels of
television
video services." Responses were scored on a five-point Likert-like scale
ranging from Strongly Agree to Strongly Disagree. The construct of
innovative tendency is defined as the degree to which a person is accepting
of innovation. Here this tendency is applied specifically to electronic
technology (INOVTECH) and measured by responses to statements such as
"It
is important for me to 'be the first on my block' to have new
electronic
equipment." Responses were again scored along a five point
Likert-like
scale, Strongly Agree to Strongly Disagree. The items in the index
measure
ATT500 had an alpha of .86 and for INOVTECH .82, indicating an acceptable
level of reliability in the index measures used (Nunnally, 1978).
In addition, questions dealing with media use, cable subscription, and
demographic information were included in the questionnaire. The
perceived
personal importance of the 500 channel system was measured by the
single
item "How important is it for you to have a 500 channel cable system?"
The
responses being on a four point Likert-like scale (4=Very important to
1=Not important). Data regarding programming type preference were also
gathered and will not be reported here.
To assess consumer valuation, respondents were asked how much they were
willing to devote per month for entertainment and service on a 500
channel
cable system on a 5 point scale: $31-40 (1), $41-50 (2), $51-60 (3),
$61-70
(4), $71-80 (5), $81 or more.[3] The respondents were also asked to indicate
the form of monthly payment preferred for a 500 channel system. These
were measured using a 5-point Likert-like scale response,(5) Very Good
to
(1) Very Bad, to presented options. Options included the following:
. A fee based on amount of time TV set is actually tuned to a particular
channel.
. A set fee for each individual channel regardless of how
much time it is watched.
. A set fee for channels that are grouped by category and
payment is not determined by how much they are watched.
. A differing fee for viewing during different times of day,
much like your telephone bill.
Statistical Analyses
Statistical analyses for RQ3 were T-tests of the difference in mean scores
between the two groups, cable subscribers and non-subscribers, on the
three variables: ATT500, Perceived Importance of 500 Channels, and
Desire
to Subscribe. For RQ4, the independent variables used in the
regression
analysis are ATT500, INOVTECH, TV use, cable subscription, age,
education,
household size, and income. The dependent variable, Desire to
Subscribe
(DS), was measured by response to "I would like to subscribe to a 500
ch
annel cable system if it were available to me" using a 5 point
Likert-like
scale (5=Strongly Agree to 1=Strongly Disagree). A stepwise multiple
regression procedure was selected to assess the relative contribution of
the variables in explaining desire to subscribe to a 500 channel cable
system. Tests of significance were all set at the .05 level.
Results
Sample Profile
The sample population was 61 percent female and 39 percent male. The
average age of respondents was 39 years old. Forty-nine percent of those
surveyed were 18 to 34 years of age, 33 percent were 35 to 54 years of
age,
with the rest being over 55 years. Reported annual household income was
as follows: 23 percent under $15,000, 17 percent $15,001 to $25,000,
21
percent $25,001 to $35,000, 13 percent $35,001 to $45,000, 11 percent
being
above $45,001, with the remainder refusing to answer. As for education, 28
percent graduated high school, 31 percent had some college, 21 percent
were college graduates, and 12 percentage had some post graduate study.
Most people lived in households with three or more people (44
percent),
with 34 percent living in two person households, and 18 percent living
alone.
Sixty-two percent of those surveyed indicated that they were currently
cable subscribers. Across the entire survey population, 35 percent
indicated they were aware of the plans to offer new digital cable service
in their area.
Data Analysis
In answering RQ1, assessing how much people are willing to pay for a
500 Channel Cable service, where a preference was stated, most people
opted
for the lowest cost payment category (See Table 1). The findings indicate
that 41 percent of respondents would be willing to pay $31-40 per
month for
a 500 channel cable system. This is the amount most similar to the
current national average for monthly payment for basic and premium
services
combined (see endnote 3). At the same time, 53 percent of the people
expressed a willingness to pay $31-50 monthly. The absolute threshold
for
monthly spending for such a service appears to be $60 as reflected by
the
steep drop off in responses beyond that range. At the same time, 41
percent of the sample indicated "Don't know" or "It depends," thus
suggesting a great deal of uncertainty as to value as perceived by
consumers.
As for RQ2, the forms of payment for a 500 channel system are presented in
Table 3 as frequencies, percentages, mean, and standard deviation. These
findings indicate that respondents favored "A flat fee in which
channels
are grouped by category and you pay for each group regardless of how
much
you watch it." This is the option most similar to the traditional
cable
pricing model in which subscribers select "packages of channels" in
the
form of service tiers, flat-rated, regardless of use. Interestingly, a
flat rate structure when attached to individual channel options (ala
carte)
was unpopular as a plurality (40 percent) thought it either a "bad" or
"very bad" option. The pricing option based on time for which the set
in
use, tuned to a particular channel, was the next favored option
(X=2.94).
The least popular, with 50 percent indicating it to be either a "bad"
or
"very bad" option was "time of day" pricing likened to the telephone
billing system.
There were significant differences among those in cable and non-cable
households in two of the three independent variables measured. The mean
score of "Perceived Importance of 500 channels" of cable subscribers
(1.53), and that of non-cable subscribers (1.03) was not significantly
different, the probability of t-value .06 being slightly greater than
.05.
Thus indicating that there was no significant difference in perception of
importance of a 500 channel cable system between cable and non-cable
subscribers surveyed. However, there were significant differences in
attitudes toward a 500 channel cable system (ATT500) between current
cable
and non-cable subscribers. Table 3 shows the mean score on ATT500 of
cable
subscribers (2.89) and non-cable subscribers (2.39) as being significantly
different, with the probability of t-value less than .05. There was also
a significant difference in the Desire to Subscribe to a 500 channel
service between current cable and non-cable subscribers. Table 3 reveals
the mean of Desire to Subscribe (DS) to a 500 channel cable system for
cable subscribers (3.14), and non-cable subscribers (2.24) to be
significantly different (p.<.05).
The results of the stepwise multiple regression procedure are seen in
Table 4 and offer answers to RQ4. All variable blocks entered accounted
for a significant increase in total variance (See Table 4). First
entered
was (ATT500) attitude toward 500 channel service which alone accounted
for
33 percent of the variance explained (R Square=.66, p<.01). Cable
subscription was the second variable to enter, third entered was TV Use,
and Age was the last variable entered (R Square=.71, p<.05). The
remaining
variables that did not enter into the final equation were INVOTECH,
education, income, and HH size.
Discussion
With 96 percent of the nation's households now capable of receiving cable
service (Kagan and Associates, 1992), the new focus in the industry's
evolution has been placed on upgrading capacity rather than expanding
territory. The historic pattern of industry development which saw systems
in small communities being developed first is in some ways being
repeated
in the movement toward 500 channel environments.[4] This circumstance
seems
likley to be occurring for several reasons. First, in these smaller
communities the demand for service is relatively inelastic due to poorer
reception, a scarcity of over-the-air channels, thus making cable an
attractive option.[5] Also, the lower capital costs of rebuilding smaller
franchise areas helps to reduce the risks associated with these
rebuilding
ventures. Finally, in many respects these upgraded areas represent
workable
"testbeds" for better understanding the cable consumer of the future.
This paper has explored the response of potential consumers in a community
scheduled to be among the first serviced by a 500 channel cable system.
Interestingly, over 40 percent of those surveyed expressed an
uncertainty
as to what such a system would be worth to them. This seems entirely
reasonable as the attributes of these large systems at this point seem
speculative to the average consumer. Where a preference was expressed,
the
lowest price category won out, perhaps a reflection of human nature
more
than anything else. Still, 41 percent were willing to embrace a price
roughly equivalent to the combined average now spent by the basic and
premium service household. There did appear to be a threshold beyond
which
prices dare not go, the $60-per-month range. Compaigne (1993) asserts that
consumer expenditures in media have been remarkably constant as a
proportion of discretionary spending for the past five years. This would
seem to suggest that new cable offerings and their price will simply
carve
up the existing consumer pie in a different fashion. How this plays
out in
an environment where increased pay-per-view options, services such as
games and video conferencing are likley to be offered, remains to be
seen.
Given the robust potential for offerings in a broadband switched
environment, whole new classes of interactive services are likley to
emerge. How they will be greeted by consumer spending must be studied in
the future with greater specificity than was possible in this project.
Also, based on our findings, respondents preferred pricing arrangements
most similar to present cable services in which prepackaged groups of
channels are offered at a set fee.
This might simply be a case of "familiarity breeding liking" as consumers
are accustomed to this marketing method currently used by cable
companies.
While the ultimate extension of consumer sovereignty may be possible,
in
that customized cable menus can be built, this was not the favored
option.
This may be heartening to some general interest cable services whose
circulation would surely drop if consumers were allowed to "pick and pay."
Yet, as a cable company's costs of acquiring content services rises in
conjunction with the need to fill cavernous channel capacity, prices
will
surely move upward along with the firm's cost of providing service.
Consumers may soon welcome an increased selectivity that keeps their
personal costs in line with the utility of the services selected by
themselves. Given that most cable subscribers now use only a fraction of
the offerings available to them (Heeter and Greenberg, 1988)
self-created
menus might be a viable alternative in the future. The transition
toward
such a "personalized" system is perhaps less a technological barrier
than a
psychological barrier for the consumer who must now choose favorites and
sacrifice other alternatives, no matter how lightly viewed some are.
The differences among cable and non-cable respondent in their
orientations toward a 500 channel cable system were addressed in this
study. Though cable subscribers placed greater importance on having a
500
channel service than did non-subscribers, there was not a significant
difference between them. Where significant differences did appear it was
in the case of attitudes held toward 500 channel service (ATT500) and
in
the desire to subscribe (DS) to such a service. Here we might suspect
that
the familiarity with cable service and predisposition toward cable
contributed to these differences. Thus, the schema called upon by these
respondents may have been quite different. Then why didn't the
"Perceived
Importance" variable produce similar results? It could very well be
that
cable subscribers used a frame of reference in which "importance"
meant the
importance of having 500 channels as opposed to the present 36 channels,
merely a perception of an increased amount. This is in contrast to the
non-subscribers who might have been responding to the differential
between
having cable and not having cable in their evaluation of importance.
Nevertheless, the correlation between Perceived Importance and Desire to
Subscribe was .41 (p<.01) and suggests that regardless of grouping,
perceived importance is strongly related to desire to subscribe to this
service.
In considering those variables that best predicted desire to subscribe to
a 500 channel system, the attitudinal measure clearly stands out for
its
importance (ATT500). This is in general agreement with theories of
reasoned action in which attitudes are known to be important in determining
likely outcomes (Fishbein and Ajzen, 1980). Having a favorable attitude
toward these services is a strong predictor of the desire to subscribe
to
them. Being a current cable subscriber, a heavier viewer of TV, also
cont
ributed to this predictive measure and seem logical in their
inclusion. Age
was found to be negatively related as younger people expressed greater
desire to subscribe. That other demographic variables did not appear
in
the final equation is consonant with LaRose and Atkin's (1988)
assertion
that demographic variables now play a lesser role (than attitudes) in
considerations of cable related behaviors. It is somewhat surprising
that
the innovative tendency measure (INOVTECH) did not enter in the
equation.
The measure did have a strong positive correlation (r=.40, p<.01) to
the
dependent measure Desire to Subscribe. Yet, placed in combination with
the
other independent variables it failed to make a significant
contribution to
the amount of variance explained.
Conclusion
As the various scenarios of the information future take shape, the
strategic plans for gaining a competitive advantage will have to involve
more than simply the technology itself. The new products and services
provided through the broadband, multimedia networks that will overlay
today's telecommunication infrastructure will have to prove economic
viability through their acceptance by willing consumers.
Cable television has developed from a small market with a utilitarian
product--improved TV reception--into today's $22 billion a year industry
by
offering more choice. Increased competition from the Regional Bell
Operating Companies, Direct Broadcast Satellite, and other sources of
information and entertainment is a certainty. As a result of that
competition, consumers seem likely to become increasingly indifferent to
the methods of transport used to bring in video services and much more
concerned with their utility and costs. Therefore, those companies
having
a "being there first" advantage will have to respond quickly to
consumer
desires. It seems obvious that cable
companies
should aim their efforts at creating favorable attitudes surrounding
500
channel cable services in order to promote subscribership. But this
task is
complicated by the fact these systems are in their earliest stages of
development. In the future, the challenge will be to expand the market
beyond the base of current cable subscribers and heavier users of
television, those identified in this study. These people have in the past
already derived some value from cable and seem favorably inclined
toward
future offerings. As systems develop, as their services and content
are
increasingly defined, the marketplace and consumer orientations are
likely
to evolve as well. Ultimately, companies supplying a world of
unlimited
information and entertainment choice must still operate within the
harsh
demands of a new marketplace.
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Table 1
Projected Monthly $ Spent on a 500 Channel Cable System
____________________________________________________________
Amount per Month Frequency Percentage
__________________________________________________________
(1) $31-40 90 40.5
(2) $41-50 27 12.2
(3) $51-60 9 4.1
(4) $61-70 2 0.9
(5) $71-80 0 .0
(6) $81 or more 0 .0
(7) It Depends. 38 17.1
(8) Don't Know. 54 24.3
(9) Missing data 2 0.9
------
n=222
Table 2
Description of Preferred Payment Options
____________________________________________________________
The form of payment Value F % Mean SD
____________________________________________________________
A set fee in which channels 1 24 10.8 3.05 1.08
are grouped by category and 2 40 18.0
you pay for each group 3 72 32.4
regardless of how much you 4 74 33.3
watch it. 5 12 5.4
A fee based on the amount 1 33 14.9 2.94 1.21
of time your television set 2 46 20.7
is tuned to particular 3 66 29.7
channel. 4 53 23.9
5 23 10.4
. 1 0.5
A set fee for each 1 43 19.4 2.80 1.22
individual channel 2 47 21.2
regardless of how much 3 57 25.7
you watch it. 4 60 27.0
5 14 6.3
. 1 0.5
A different fee for viewing 1 60 27.0 2.56 1.26
at different times of day, 2 52 23.4
for example, like a telephone 3 47 21.2
bill where certain times of 4 49 22.1
day are discounted. 5 13 5.9
. 1 0.5
_________________________
n=222
5 =Very Good, 1=Very Bad.
"."= Missing data.
Table 3
Comparisons of Cable Subscribers and Non-subscribers on
Perception of Importance, ATT500, and Desire to Subscribe
__________________________________________________________
Subscribers Non-subscribers
N=138 N=74
Mean SD Mean SD T DF Prob.t
___________________________________________________________
Perceived 1.53 1.03 1.28 .79 -1.93 186.04 .055
importance
ATT500 2.89 .71 2.39 .70 4.97 151.56 .000
Desire to 3.14 1.10 2.24 1.07 -5.74 153.21 .000
Subscribe
___________________
n=212, 10 cases with missing data removed from analysis
Table 4
Stepwise Regression Independent Variables
on Desire to Subscribe to 500 Channels
R Square .709
Standard Error .641
F 93.891
Regression df 6
Residual 154
Variables in Beta F R Square P
____________________________________________________________
ATT500 .81 300.95 .66 .00
Cable .17 169.14 .68 .00
Subscription
Hrs. TV .12 119.33 .70 .00
Age -.11 93.90 .71 .05
______
Variables not entered in equation: INOVTECH, Income, Education, HH size
Appendix
Scale items for ATT500
1. I am very interested in the idea of a 500 channel cable system.
2. Most people do not need 500 channels of television video services.
3. I would need a lot more information about the system before subscribing
to a 500 channel cable system.
4. The thought of having 500 hundred channels available on a cable system
seems overwhelming to me.
5. With 500 hundred channels to select from, I am concerned it will be hard
to choose which one to watch.
6. With a 500 channel system in their home, people will spend too much time
watching television.
7. A 500 channel cable system would give me something to do
when I am bored that regular television can't.
8. A 500 channel cable system would help me get away from my daily troubles
in a way that regular television probably can't.
9. A 500 channel cable system would help me keep better track
of what is going on in the world.
10. A 500 channel cable system would help me keep better track
of what is going on in the local community.
11. With 500 channels available to me, I'd probably prefer
watching television to renting a videotape.
12. I would be reluctant to have a 500 channel cable service
even on a one-month trial basis.
13. The idea of carrying out business transactions such as banking or
shopping through my cable service appeals to me.
14. A 500 channel cable service would allow me to take better control of my
own television viewing.
15. I consider myself fairly knowledgeable when it comes to 500 channel
cable systems.
Scale Items for INVOTECH
1. It is important for me to be "the first on my block" to have new
electronic equipment.
2. I enjoy trying our new electronic products or services, new computers,
software, and things like that.
3. I am fairly knowledgeable when it come to new electronic
products.
4. Friends and family often look to me for advice about new electronic
equipment.
5. I look forward to getting new electronic equipment in my home.
6. Knowing about new electronic products makes me feel up-to-date on
trends.
7. Having new electronic equipment in my home generally makes my life
better.
8. In general, I distrust new technologies.
9. New electronic products are usually unnecessary because they do not add
to the quality of people's lives.
[1] The term 500 channels has little technical meaning as related to cap
acity (e.g.
defining limits), but rather it has become a fa
irly convenient symbolic term for vastly
expanded services.
It is a term that has been adopted by the popular press (see Elmer-
Dewitt, 1993) and used to describe this large capacity systems.
[2] The completion rate was 38 percent. In addition to refusal, twenty
five surveys were
excluded from the study because they were from the wro
ng telephone prefix, incomplete, or
otherwise deemed unusable.
[3] The
starting point of the scale was set at $31 as it reflects the average month
ly
basic rate ($20.75) plus the monthly average pay rate ($
10.48) for cable service in 1993
(Kagan Associates, 1993) a
nd seems a reasonable starting point.
[4] The communities selected for
the first phase roll-out by TCI were geographically
dispers
ed and most had populations of under 50,000 residents.
[5] DBS does repr
esent a viable competitor especially in more rural locales, yet the
degree to which it is a reasonable substitute for cable service is
countervailed by the
need for consumers to pay around $700
for per dish in addition to monthly charges.
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