Analysis of Subscription Demand for Pay-TV

In this paper, we will conduct an analysis from an empirical perspective concerning broadcasting demand behavior and characteristics. More concretely, we will assume three options (subscription patterns), namely, nonsubscription, cable TV subscription, and subscription to broadcasting services via communications satellites (CS), and we will conduct an analysis of broadcasting service demand behavior using a discrete choice model. According to our result, price elasticity is low for cable TV and CS subscribers, which is a contrast to the United States, where price elasticity for paid broadcasting is high. It shows that factors other than price continue to have a strong influence on demand behavior (subscription choices) in the Japanese market for regular and paid broadcasting (the multichannel market) and that the market has not yet entered the phase of price competition between cable TV and CS broadcasting. With regard to channel number elasticity, the figures are high for basic channel service and low for special channel services. This indicates that basic services are an important concern for viewers. This suggests that, in line with reports that the spread of cable TV in the United States was promoted by difficulty in receiving terrestrial broadcasts, basic channel services may be more important than special channels as keys to the spread of paid broadcasting in Japan.