The Market For Subscription Television Service In The United States

摘要

This study develops a simultaneous equations model of the market for subscription television service consisting of analog and digital cable service. Beyond modeling the market for subscription television service and identifying the factors that impact the demand and supply of analog and digital cable service, an effort is made to determine the extent to which direct broadcast satellite service competes with cable television for subscribers in this market. The model consists of four equations: demand equations for analog cable service and digital cable service and supply equations for analog cable service and digital cable service. The model is estimated using the full information maximum likelihood technique. A number of factors clearly impact the demand and supply of analog and digital cable service, and this impact is quantifiable. The size of the market measured as the number of households passed is, not surprisingly, a dominant factor in explaining analog and digital cable service demand and supply. Probably the most significant result is that the estimates indicate that while changes in the relative price of analog or digital cable service have no quantifiable impact on the demand for analog cable service, they do have a statistically significant effect on the demand for digital cable service. Finally, as the penetration of DBS service increases, the number of analog cable service subscribers is reduced.