80% Of Cord Cutters Leave Because Of High Cable TV Prices, But The Industry Still Refuses To Compete On Price

from the it's-not-a-problem-if-we-ignore-it,-right? dept

A new study from Tivo (pdf) notes that nearly half of current pay TV subscribers are considering cutting the cord this year. That's not particularly surprising given the fact that the first quarter set cord cutting records, and the second quarter is expected to be significantly worse. Similarly unsurprising is the fact that of these defecting customers, roughly 80% of those departing say they're doing so because traditional cable TV service is simply too expensive:

37.1% of respondents spent at least $101 per month on cable TV, with some spending upwards of $150 per month, with trends only aiming higher. While cable providers often pay ample lip service to "providing value," the entire cable and broadcast sector continues to believe that it can simply refuse to compete on price with a growing roster of streaming competitors now arriving at the gates of their beloved cash cow.

Case in point is Charter Communications, which after a recent acquisition spree has been raising TV rates upwards of 40% despite the supposed bump in competition. Charter CEO Tom Rutledge, who was deemed to be the highest paid executive in the United States last year at $98 million, has insisted that these customers were simply "mispriced" under previous ownership and needed to be nudged in the "right direction" (read: paying even more money for the same service they already thought was too expensive):

"It’s a difficult thing to model. But we’re coming at it both ways, both from creating a value proposition in the pricing and packaging we have, and doing those smart things that you can do with an existing customer base that’s been mispriced to move them in the right direction."

That's gibberish, and shockingly, this kind of tone deafness to the overall trajectory of the cable sector is only causing a spike in cable TV defections at the company, which lost more than 100,000 cable TV subscribers last quarter. Tivo makes it clear that the cable industry can't continue the ongoing head-in-the-sand approach to dealing with the rise of cord cutting and streaming competition:

When the increase in monthly bills is coupled with the fact that 81.4% of unsatisfied respondents selected “Too expensive/increase fees for cable/satellite service,” it becomes evident that something must be done about this group. With more options than ever for TV in 2017, consumers continue to get smarter about their TV options, and many have discovered ways to access TV for far less than $100 a month. Skinny buddle offerings have increased, too, and options include Dish Networks’ SlingTV, DIRECTV NOW and Sony’s PlayStation Vue.

Instead of competing on price and package flexibility, most large cable companies (like Comcast) have responded to cord cutting by not only raising TV rates, but ramping up deployment of arbitrary and unnecessary broadband usage caps and "overage fees", allowing them to counter any lost TV revenues with broadband price hikes, and punish folks looking to wander away from Comcast's own TV walled garden. But Charter is prohibited from using caps for another six years as a condition of its recent megamerger, conditions the FCC has started to slowly but surely nibble away at.

Still, the cable industry has at least progressed in one meaningful metric: a few years ago it denied any of this was happening whatsoever.

Filed Under: cable, cable tv, competition, cord cutting, fees, high prices, tv


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  1. identicon
    Anonymous Coward, 19 Jun 2017 @ 11:20am

    In the Defense of Cable Companies...

    Hold your pitchforks for a second, I'm going somewhere with this.

    The cable TV industry is clearly hurting and it's executive decision makers can't see more than 3 feet in front of them when it comes to fixing things. Maybe it's not all corporate greed though?

    Many television broadcast stations demand a king's ransom of money from cable companies to cover "basic operating costs". These costs are usually the fees of carrying high profile television shows (everything from premier broadcasts of survivor to reruns of Seinfeld). Those shows cost up to millions to produce because paying for actors, writers, directors, and art interns is not cheap. all of that staffing costs a lot because other television projects are making competing bids so their show can be paid big money by TV stations who can get big money from advertisers so they can pay for the shows they produce to get more money from advertisers and yadda yadda yadda.

    Also don't forget that everyone listed above has everyone else locked into multi-year contracts that are not even remotely in sync.

    Yes, cable prices are too high for way too little service. It's not like they can flip a switch and provide a proper service-to-price ratio. Even if all these CEOs, CFOs, COOs, and SOBs take paycuts down to minimum wage it probably wouldn't even dent current licensing fees.

    We're just going to have to wait for Cable Tv to die of natural causes and be replaced by more useful services.

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