Although three-quarters of the U.S. public subscribe to pay television, the number of subscriptions have grown only marginally since 2001. However, average revenue per subscription continues to increase, allowing overall revenues to increase 8.5% in 2002 and 5.3% in 2003. From 1995 through 2003, the cable industry spent $75 billion on infrastructure improvement, at an average cost of more than $1,000 per subscriber. This revamped infrastructure allows for digital cable service with increased bandwidth, and two-way communication for video-on-demand, digital video recording, high-speed Internet and telephone services.

Although three-quarters of the U.S. public subscribe to pay television, the number of subscriptions have grown only marginally since 2001. However, average revenue per subscription continues to increase, allowing overall revenues to increase 8.5% in 2002 and 5.3% in 2003. From 1995 through 2003, the cable industry spent $75 billion on infrastructure improvement, at an average cost of more than $1,000 per subscriber. This revamped infrastructure allows for digital cable service with increased bandwidth, and two-way communication for video-on-demand, digital video recording, high-speed Internet and telephone services.

The primary industry driver for paid television services is household wealth in the form of personal disposable income. In the absence of economic growth, the industry can still be driven by increases in the number of television households, and by increases in the quality and quantity of programming that promote interest in pay television subscriptions--in Mintel’s exclusive consumer research, one in four respondents indicated frustration in the quality of programming.

This report examines the hypothesis that even at a limited growth rate of 1% annually in subscriptions, industry revenue should grow at 5% annually or more due to increased revenue per consumer, thanks to uptake of digital video services and increased subscriptions to Internet and telephone service provided by pay television providers.

Original consumer research examines attitudes and behavior by age, gender, ethnicity and income, and a six-year trend analysis predicts future growth.

Mintel defines the pay television market as all sales of television services to the home that are paid to multi-channel video product distributors. Advertising fees paid to these distributors or to content providers are discussed where applicable, but are not the primary subject of this report. Likewise, television content is discussed where applicable, but the primary subject is the distribution of that content to the consumer. Free television broadcast stations are also excluded from this report.