Broadband Users Don't Want The Extras - InformationWeek

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Broadband Users Don't Want The Extras

A survey by Strategy Analytics says there's still more promise than profit in the subscription sales of premium content to online consumers.

The subscription-revenue potential of premium content sales to broadband consumers continues to hold more promise than profit, according to a survey released Thursday by research firm Strategy Analytics.

While music services tested highest among premium categories in terms of consumer interest, networked gaming may be the area most likely to generate revenue, Strategy Analytics said.

According to the survey of more than 500 broadband-Internet-equipped houses, nearly half of respondents expressed interest in using premium content services for legal music downloads, but less than 20% of those were willing to pay subscription fees of $5 to $15 per month for the service.

In part, this hesitation stems from the casual-listener nature of much the music audience, analyst James Penhune said. Most listeners are satisfied with existing music access via radio and CDs.

Earlier approaches to online music distribution may play a role as well.

"In part, the potential for music subscriptions may have been spoiled for some time by free services like Napster," he said.

Networked gaming, on the other hand, does not have a no-fee precedent to overcome. What's more, it further benefits from being unavailable in other media. Networked gaming, in short, demands that the user be on a network.

"The gaming market is not as big as the music market," Penhune said, "but its members are far likelier to subscribe to premium services in order to get the experience." Penhune's findings extended to both PC-based gamers and video-game console users, with members of each group more inclined to pay $5 to $15 necessary for a month's play.

"The video game business has always been driven by highly motivated users who are accustomed to paying significant prices for hardware and software," he said.

The service-provider implications of the findings were clear from the researcher's perspective: music may get the attention, but games get the user's investment.

Other premium content subscription areas generating high curiosity but lower cash flow potential included streaming music channels (45.9% of respondents) and streaming entertainment videos, including video trailers (45.5%). Streaming news footage (43.8%) outperformed video streams of sports highlights, which caught the interest of only 29.1% of the survey's respondents. Few respondents were willing to pay for any of these services.

In Penhune's view, the subscription-resistance of the broadband market may change, but slowly.

"We're still finding that most broadband customers are attracted by speed and other practical benefits," he said. "It's not viewed as a content-driven medium yet."

The best bet for providers seeking to build a subscription base is to target specific market segments, Penhune said. "Look for audiences such as online gaming, and NASCAR and other specialized sports, where people are willing to pay for a service they perceive as valuable," he said.

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