Price, Consumer Habits Will Define iTV Market

Most consumers lose interest in interactive TV set-top boxes at prices over $200, according to a study by TechTrends, which found product pricing will be the most important determinant of market success.

Most digital set-top boxes that support Internet access, personal TV, digital video recording, video-on-demand, television commerce (t-commerce), and cable/satellite service will cost more than $200. According to TechTrends’ study “Interactive TV and Home Control Set-Top Boxes: A Segmentation Analysis of Consumer Demand, Price Sensitivity and Buying Intent,” consumers who are heavy Internet users, DBS service customers, and simultaneous PC/TV users are those most interested in iTV service.

Forty percent of both cable subscribers and satellite subscribers access the Internet on their PC and watch TV at the same time, and 60 percent of each group are interested in Web browsing and email through their TV. But more than half of all DBS subscribers (50 percent of DirecTV, 54 percent of Dish Network) spend more than 10 hours per week accessing the Internet on their PC, compared with only 46 percent of cable subscribers. Half of DBS subscribers (51 percent of DirecTV, 48 percent of Dish Network) watch more than 20 hours of TV per week, while only 38 percent cable subscribers watch more than 20 hours per week.

According to TechTrends, DBS subscribers will pay more than premium cable subscribers for iTV set-top boxes. Among those who are interested, 25 percent of DBS subscribers will pay more than $200, compared to 20 percent of premium cable subscribers. TechTrends also found that satellite users are 50 percent more likely than cable users to subscribe to iTV services.

TechTrends also found that active Internet users are more than twice as likely as casual users to pay more than $200 for an iTV set-top box. In addition, 60 percent of consumers who simultaneously access the Internet on their PC and watch TV are interested in iTV set-top boxes, compared to only 47 percent of users who engage in these activities separately.

“Consumers who have the most exposure to TV programming and online content exhibit more interest and less price sensitivity than other consumers,” said Adriana Weinfeld, research analyst. “These consumers represent a substantial opportunity for providers of iTV products and services.”