Predictions

by Karl Bode


Filed Under:
cable tv, competition, cord cutting, tv

Companies:
at&t, comcast, netflix



Cord Cutting Accelerates Faster Than Expected, As Cable Still Refuses To Compete On Price

from the inevitability dept

As we just got done noting, roughly 5.4 million Americans are expected to cut the TV cord this year, thanks largely to the rise in cheaper, more flexible streaming TV alternatives. And while some traditional cable TV providers have responded to this challenge by competing on price and offering their own cheaper streaming alternatives (AT&T's DirecTV Now, Dish's Sling TV), most of the cable and broadcast sector continues to double down on the very things causing this shift in the first place. Like a refusal to invest in customer service, an obsession with mindless merger mania, and seemingly endless price hikes.

Companies like Comcast have tried to stall this natural evolution by striking marketing partnerships with Netflix and including Netflix in their set top boxes, in the apparent hopes that users won't get rid of traditional cable if they're already getting Netflix as part of their monthly cable, broadband, and phone bundle. But data released this week indicates that this effort to stop cord cutting by cozying up to Netflix isn't really working, and cord cutting is accelerating at a rate notably faster than many analysts predicted:

"Even as traditional pay TV providers form partnerships with former over-the-top (OTT) rivals to retain customers, cord-cutting continues to outpace projections. According to eMarketer’s latest figures, the number of cord-cutters—adults who have ever cancelled pay TV service and continue without it—will climb 32.8% this year to 33.0 million. That’s higher than the 22.0% growth rate (27.1 million) projected in July 2017."

Comcast cozying up to Netflix isn't working because the industry continues to misread the situation. Customers are cutting the cord primarily due to the high cost of mandatory, bloated cable bundles filled with channels nobody actually watches. Comcast's solution was to include a Netflix subscription -- but only if you subscriber to Comcast's higher end TV bundles, something that certainly doesn't address the actual problem.

The report proceeds to note that users are drawn to streaming alternatives for a number of reasons, not least of which being the rise in quality original content at Netflix, Hulu and Amazon, but the lack of obnoxious, hidden surcharges and fees:

"The main factor fueling growth of on-demand streaming platforms is their original content,” eMarketer principal analyst Paul Verna said. “Consumers increasingly choose services on the strength of the programming they offer, and the platforms are stepping up with billions in spending on premium shows. Another factor driving the acceleration of cord-cutting is the availability of compelling and affordable live TV packages that are delivered via the internet without the need for installation fees or hardware."

So why aren't more cable companies competing on price? While cable companies that charge an arm and a leg for DVRs and cable boxes aren't blameless, broadcasters largely dictate programming pricing. And while that's not as big of a deal for companies like AT&T and Comcast that are broadcasters, it's an untenable situation for smaller cable ops, who already have pretty tight profit margins on pay TV due to high broadcaster rates. The same broadcasters who will, of course, be partially responsible for the steady price hikes we're also starting to see in streaming services.

But companies like Comcast refuse to compete on TV pricing for another reason: they know that a lack of competition in broadband (which is actually getting worse in many areas) means they can relentlessly jack up prices for broadband to recoup any lost revenue on the TV side of the equation. That means not only higher overall prices for broadband, but the implementation of usage caps and overage fees, unnecessary surcharges that not only make broadband more expensive, but make cutting the cord more difficult and costly as well.


Reader Comments

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  • identicon
    Pixelation, 30 Jul 2018 @ 7:44am

    And another thing

    Here's another reason to cut the cord. Ads. I can stream shows from Netflix and Prime and watch an entire show without being forced to watch advertising.

    So, let's recap; less expensive, choose what to watch when I want it and no advertising. Cable is hosed unless they begin to understand why we're leaving.

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 30 Jul 2018 @ 7:58am

    Could be a good thing

    NEW contracts with those Broadcasters Contracts that keep going up, for NO REASON(ESPN)
    90% of TV ISNT CREATION,,,its only distribution, showing you the SAME crap you watched, last week, last month and the month before..
    Consolidation?? WHY in hell does HBO/CBS/..(there are 7 major corps) need so many channels to show the SAME THING?? We could break it all down to LESS THEN 100, very easily..

    Who here knows that there are over 400 Movie releases per year...MOST are direct to DVD, and hardly see a TV/CABLE/SAT..

    To those that dont know..
    LOCAL channels are all around you.. Im in RURAL IDAHO and get over 20.. 1/2 are abit religion with movies, Others are independent AND FIGHTING to keep broadcasting CHEAP(yes they pay to give you a GOOD channel) and most are only LOCAL news and abit national..CBS, FOX, PBS, and most of the Main channels and a few INTERESTING GRIT TV??

    This is all going to PUSH the Big corps to raise price in Local broadcast..the idea of LOOSING MONEY, is not a thing they like. It would be interesting if you DROPPED all the wages to ABOUT the same nation wide..WATCH those in larger cities have LOTS of fun.. Just Cause you live in an expensive city DONT mean things should COST ALLOT MORE..

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Jul 2018 @ 8:17am

      Re: Could be a good thing

      >Who here knows that there are over 400 Movie releases per year...MOST are direct to DVD,

      Wouldn't straight o YouTube get more income than DVD sales?

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Jul 2018 @ 8:28am

        Re: Re: Could be a good thing

        hmm... given the youtube system... that brings a lot of factors into play.

        reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 30 Jul 2018 @ 3:49pm

        Re: Re: Could be a good thing

        Wouldn't straight o YouTube get more income than DVD sales?

        Why not both? 'If you liked what you just watched, head over to Amazon/[Burn on demand DVD retailer] for a physical copy?'

        I know I'd be willing to throw a few bucks for some of the stuff I've seen on YT if it meant having a physical copy, to reward the creators if nothing else.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 31 Jul 2018 @ 7:00pm

          Re: Re: Re: Could be a good thing

          Physical copy? Why? If I can see it over and over without getting a physical copy.

          Second, many things, I mean most TV and Film, don't have that replay value.

          reply to this | link to this | view in chronology ]

          • icon
            That One Guy (profile), 31 Jul 2018 @ 7:57pm

            Re: Re: Re: Re: Could be a good thing

            Just in case, and/or if you run into a situation where you don't have a connection available. I know I've run across instances where I tried to find something again only to learn that it had disappeared for whatever reason, such that now I try to get offline copies of anything I find interesting if possible.

            reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Jul 2018 @ 6:58pm

      Re: Could be a good thing

      Fine. Let them hike prices even more. See how that much more people flocks away.

      reply to this | link to this | view in chronology ]

  • identicon
    Paul Brinker, 30 Jul 2018 @ 7:59am

    Don't forget they cant

    A long time ago one of the cable companies tried to fix this problem, they got sued by the sports networks for contract violations since their contract was stupidly broad in terms of what packages were required to carry.

    I suspect lots of other networks have just as bad contracts in place as well that will run till bankruptcy.

    reply to this | link to this | view in chronology ]

    • icon
      Ninja (profile), 30 Jul 2018 @ 8:03am

      Re: Don't forget they cant

      Some of them are the types that should be greeted with "good riddance" when they part.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Jul 2018 @ 8:56am

      Re: Don't forget they cant

      Sooner or later those contracts will come up for renewal. If the cable operators refuse to sign renewals of bad contracts this problem can be resolved.

      Sports networks have had the cable companies over a virtual barrel for years but it's really the cable operators, and ultimately the viewers, who have the ports networks over that same barrel. We're telling the cable operators what we want. All they have to do is push that same agenda and the sports networks will have no choice. If cable doesn't carry their events, who will?

      Ideally all sporting events would just get pushed to the web so those who want to pay for them can and those who don't want to aren't forced into subsidizing something unwanted.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Jul 2018 @ 7:02pm

      Re: Don't forget they cant

      Then, they don't truly want.
      Second, those contracts may end someday, why keep renovating?
      Third, many of those contracts are renewed every year.
      Lastly, your suspicions are irrelevant. That is just a fallacy thinking.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Jul 2018 @ 8:14am

    The obvious solution is that broadband service be just a dumb pipe that carries all content equally.

    Someone needs to ensure that the ISPs don't keep pulling stupid shiat like caps, overages, throttling etc.

    If ISPs want to include any content they own as an option to their service, fine. But no penalizing consumers who have no choice in providers by ramming shiat sandwiches down their throats.

    Just recently got a 2nd broadband provider in my area. I had been stuck for 20+ years with just one provider.

    When I called and told them XXX was now offering service in my area and asked what kind of deal they could do to keep me they said they had nothing to offer other than what I already had which was NOT a promotional price. ( internet only ) So yeah I switched.

    Get rid of the monopoly/duopoly markets and then maybe the major players will actually start paying attention.

    Most schools in this area have everything on line. They do their homework in the cloud, get their assignments and grades through the cloud. Have to read/listen to things in the cloud, communicate with their teacher in the cloud.

    Think about how many things people do everyday that require internet. It's not just a "neat" thing to have anymore.

    Before the telephone you either mailed a letter or went and saw someone. Just as the telephone ( POTS ) became a utility the internet should become one now. For the same reasons.

    As long as we the sheeple keep putting people in office who turn a blind eye to the shenanigans ISPs keep pulling we will continue to get those shiat sandwiches. Even if they change to honey wheat bread it's still a shiat sandwich

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Jul 2018 @ 8:25am

      Re:

      I agree with you, on the whole, but then you pulled out "sheeple" - please, please retire this term from your lexicon. It's a far too widely used, misused, and pejorative term that makes it incredibly easy for people to ignore you.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Jul 2018 @ 10:29am

        Re: Re:

        Seriously. Baaaaaad move.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Jul 2018 @ 4:29pm

        Re: Re:

        Sorry but it's just so damn inconvenient to type out " people who have no idea who or what they are voting for other than what political ad they saw last" Maybe I'll just paste it in to a .txt file and copy as necessary

        reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Jul 2018 @ 7:05pm

      Re:

      Yes. I will add to that MOBILE internet. When mobile internet becomes ubiquitous and cheap there is no need for wifi.

      So yeah, the real goal is to make mobile internet a utility.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Jul 2018 @ 8:19am

    The obvious solution is that broadband service be just a dumb pipe that carries all content equally.

    Someone needs to ensure that the ISPs don't keep pulling stupid shiat like caps, overages, throttling etc.

    If ISPs want to include any content they own as an option to their service, fine. But no penalizing consumers who have no choice in providers by ramming shiat sandwiches down their throats.

    Just recently got a 2nd broadband provider in my area. I had been stuck for 20+ years with just one provider.

    When I called and told them XXX was now offering service in my area and asked what kind of deal they could do to keep me they said they had nothing to offer other than what I already had which was NOT a promotional price. ( internet only ) So yeah I switched.

    Get rid of the monopoly/duopoly markets and then maybe the major players will actually start paying attention.

    Most schools in this area have everything on line. They do their homework in the cloud, get their assignments and grades through the cloud. Have to read/listen to things in the cloud, communicate with their teacher in the cloud.

    Think about how many things people do everyday that require internet. It's not just a "neat" thing to have anymore.

    Before the telephone you either mailed a letter or went and saw someone. Just as the telephone ( POTS ) became a utility the internet should become one now. For the same reasons.

    As long as we the sheeple keep putting people in office who turn a blind eye to the shenanigans ISPs keep pulling we will continue to get those shiat sandwiches. Even if they change to honey wheat bread it's still a shiat sandwich

    reply to this | link to this | view in chronology ]

  • identicon
    Digitari, 30 Jul 2018 @ 8:23am

    price

    I moved from west Texas to west Michigan, my tier 2 cable went from 97$ to 147$, same channels, same net speed. The difference, the company

    reply to this | link to this | view in chronology ]

  • identicon
    Drew Costen, 30 Jul 2018 @ 10:57am

    It's not always about the price. With a combination of Netflix, CraveTV, Amazon Prime, YouTube Premium, and iTunes season passes for series that the aforementioned streaming services don't offer in Canada, I easily pay more for steaming shows now than I would if I still had cable (which I cancelled in 2010). But it's all worth it because I get to watch TV shows without commercials, and I can also watch them at my own pace, as well as on any device I want (if I'm at home I'll watch using my Apple TV, but thanks to streaming and downloading I can watch shows anywhere on my iPad or iPhone as well).

    reply to this | link to this | view in chronology ]

    • identicon
      cal riech, 30 Jul 2018 @ 12:08pm

      Re:

      Word to the wise; you don't necessarily need to subscribe to all those services at the same time, you could rotate one for the other every couple months to keep your content fresh. It would take some extra work on your part, but it could be well worth the hassle.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Jul 2018 @ 7:07pm

      Re:

      It is always about price.

      >>> Netflix, CraveTV, Amazon Prime, YouTube Premium, and iTunes season passes

      You are ridiculous.

      Get a Bugatti, if it is "not always about price".

      reply to this | link to this | view in chronology ]

  • identicon
    I.T. Guy, 30 Jul 2018 @ 11:43am

    " but only if you subscriber to Comcast's higher end TV bundles"

    But I don't want to subcriber to Comcast. No no no. I don't want to subscribe either. :)

    reply to this | link to this | view in chronology ]

  • icon
    Caleb (profile), 30 Jul 2018 @ 1:38pm

    They just don't get it.

    Charter has been airing anti- DirectTV and AT&T ads in my local market for the past few weeks that highlight those providers new offerings which strip the various sports networks for a "lite" offering.

    The ads consist of various people all basically saying "No sports? Not switching.."

    THAT is your differentiator? THAT is what you are going to bank your customer retention on? That you provide access to overpriced, overvalued sports networks on your basic tier? Thanks for informing me that your competition actually has a better offering! How are their demographics pointing to a larger segment of their customer base wants sports in their mandatory tier?

    As Statler said to Waldorf, "SELL!"

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 31 Jul 2018 @ 7:10pm

      Re: They just don't get it.

      It is NOT that they don't get it. It is just that they don't care. They are not stupid. They are aware and know the market well. They just know they usually are in a position of monopoly/oligopoly as others have mentioned, so they abuse and don't care. The old saying: "if you don't like the price don't buy it".

      reply to this | link to this | view in chronology ]

  • identicon
    chris, 30 Jul 2018 @ 7:05pm

    nope

    i cut the cord back in 2006. i refuse to get cable until they stop charging extra for stb's or allow 3rd party boxes.

    they advertise 29.99 rates but add on until it is 100$ plus

    reply to this | link to this | view in chronology ]

  • identicon
    Paul, 1 Aug 2018 @ 12:37am

    Free media

    I like the radio.

    reply to this | link to this | view in chronology ]


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