Cable television may have more customers, but direct broadcast satellite (DBS) [define] providers have more satisfied customers, according to Leichtman Research Group, Inc. (LRG). The analysis of more than 1,600 U.S. households revealed that a full 70 percent of DBS subscribers reported high satisfaction rates, compared to 53 percent of cable subscribers.
“At the core of the high satisfaction is that the consumer made a choice to get DBS (which they often don’t feel with cable) and the service has generally lived up to expectations,” commented Bruce Leichtman, president and principal analyst, LRG.
LRG’s findings — virtually unchanged from the year before — would suggest that TV-watchers are busily erecting satellite dishes, but the firm’s research indicates that satisfaction rates will do little to impact new subscriptions. Overall, 11 percent of cable subscribers report that they are likely to switch from their current provider in the next six months, while 10 percent of DBS subscribers report that they are likely to switch.
Satisfied customers are more likely to “talk up” DBS to friends and colleagues, but switching can be complicated. “Certainly word-of-mouth from satisfied users has helped DBS grow. But there are ‘switching costs’ of going to DBS. While it is simple, and the start-up costs are generally zero — it still requires consumers to take the action of having a dish put on the house,” said Leichtman.
Targeting a variety of customer segments will help spur DBS’ growth. Since only 20 percent of new DBS subscribers in areas where cable TV is available say that they switched from a digital cable service, Leichtman suggests that DBS providers focus where cable is either unavailable or the cable systems have a limited number of channels.
Leichtman also suggests that DBS providers target the various market segments that will find incentives and competitive pricing attractive. Price sensitive customers would be likely to switch, along with cable’s more high-end digital customers.
Of the 67.5 million cable TV subscribers in the U.S., 22 million subscribe to digital cable, while DBS had roughly 21.6 million subscribers at the end of 2003. DBS maintained an edge until early 2003, when digital cable subscribers exceeded satellite subscribers. The two DBS providers — DISH Network and DIRECTV — reported more than 9 million subscribers and more than 12.2 million subscribers, respectively.
