Studies

by Karl Bode


Filed Under:
cable tv, competition, price



Another Study Shockingly Discovers That Cable TV Needs To Compete On Price

from the well,-duh dept

For the last decade the cable and broadcast industry has gone to great lengths to deny that cord cutting (dropping traditional cable for streaming alternatives, an antenna, and/or piracy) is real. First, we were told repeatedly that the phenomenon wasn't happening at all. Next, the industry acknowledged that, sure, a handful of people were ditching cable, but it didn't matter because the people doing so were losers living in their mom's basement. Then, we were told that cord cutting was real, but was only a minor phenomenon that would go away once Millennials started procreating.

Of course none of these claims were true, but they helped cement a common belief among older cable and broadcast executives that the transformative shift to streaming video could be easily solved by doubling down on bad ideas. More price increases, more advertisements stuffed into every viewing minute, more hubris, and more denial. Blindness to justify the milking of a dying cash cow instead of adapting.

Shockingly it's not working, with the third quarter seeing the same old story, as a significant number of customers decide to drop the bloated, expensive, traditional cable bundle:

A study this week by Morning Consult once again made the obvious point that if cable operators want to adapt to this new competitive threat, they absolutely must compete on package flexibility (giving users greater control over the channels they choose in their bundles) and price:

"The poll, conducted from Oct. 18-19 among a national sample of 2,201 adults, found 65 percent of respondents said that TV bundles force consumers to pay for channels they don’t want, with 73 percent of Americans saying they would prefer to choose the exact channels included in their cable or satellite TV packages."

For most people, cost was the biggest reason for cutting the cord: 63 percent said the expense of a cable subscription was a major factor in dropping it, while 53 percent said the same for ending their satellite subscription. The second most common factor for cancellations, cited by 37 percent, was the ability to access all desired content through streaming services.

That cable needs to finally seriously compete on price isn't a new message; it's just that the industry doesn't want to hear it.

That is largely because some of these companies (mostly cablecos) have an ace in the hole: a growing monopoly over broadband. Comcast, for example, has responded to the cord cutting threat by imposing usage caps and overage fees upon huge swaths of its barely-competitive broadband footprint to both a) raise prices on captive broadband customers, and b) use caps and overage fees to punish users for dropping their traditional cable TV packages. They get their pound of flesh one way or another, thanks to the sorry state of the broadband sector.

Again, there are no good choices here if you're a cable and broadcast industry executive actually interesting in staying in the TV business, where actual competition is only just starting to heat up. Either you ignore consumer demand for a cheaper, better, and more flexible product and suddenly find yourself in a terrible hole and behind more agile competitors. Or you adapt, take an upfront financial hit, and at least get out ahead of a trend that's been obvious for the better part of the last decade.


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  • icon
    Gary (profile), 7 Nov 2018 @ 10:47am

    Compitition

    More deregulation isn't going to encourage a new cable company to spring up and run lines when it is so much more profitable for the existing companies to sit on their asses and raise prices.
    It'll take some serious effort to get internet service treated like a utility. We have a working model in socialist Europe how this can be rolled out at least.

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

    • identicon
      Anonymous Coward, 7 Nov 2018 @ 1:48pm

      Re: Compitition

      Which countries in Europe are socialist, (not Democratic Socialist)?

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

      • icon
        Gary (profile), 7 Nov 2018 @ 3:51pm

        Re: Re: Compitition

        Which countries in Europe are socialist, (not Democratic Socialist)?

        All the ones with better internet than the US. And free healthcare. See how dangerous these socialist programs are? /s

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

        • identicon
          Anonymous Coward, 7 Nov 2018 @ 4:46pm

          Re: Re: Re: Compitition

          Well, I agree that it is not scary.

          In addition, some people in the us think that many if not all European countries are socialist and that is simply not the case. Several European countries self identify as Democratic Socialist which is entirely different but that does not seem to stop the silliness. That is why I asked.

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

  • identicon
    Annonymouse, 7 Nov 2018 @ 11:05am

    Silver Bullet

    If we could pull the telcos hands off of the network itself... or chop em off at the wrist.... the infrastructure could be relegated to utility status and be looked after by the locals with oversight and maube a helping hand where needed just like our roads and power grid is supposedly handled.

    Unfortunately heads will have to litterally roll before there is any hope of that happening.

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

  • identicon
    bt, 7 Nov 2018 @ 11:33am

    I don't really buy that the CEO's didn't know it was happening.

    I think they have been pretending that it's not happening with a nod and a wink, so as to have the time to squeeze every last drop out of the business. The pursuit of short-term profits is really the thing here.

    They will leave the future to some other sucker after they milk the cow dry, then do some more mergers and acquisitions, load it up with debt and walk away with millions in their pockets.

    This is how our Job-Creators and the Wall Street Finance complex rolls.

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

  • identicon
    Anonymous Coward, 7 Nov 2018 @ 11:38am

    There is no downside to cutting the cord

    I went from satellite to one of the online streaming services. I also went to a gigabit fiber internet to support that.

    There is literally no downside to my choice.

    - I have roughly the same channels I watched before
    - I have 10x the internet speed of my prior internet provider
    - Combined internet and streaming services I am saving ~$60/month
    - I can stream not only on my TV's, but also any of my phones or tablets.
    - No equipment rental fees

    That is what cable and satellite companies have to go against to win me back. So far nobody has been able to come close that is not a very limited offer.

    Their pitiful "Hey here is $300 if you come back to us!" is meaningless since I am saving more than $720 a year after switching away from them. Especially since the discount rate they quoted was only for 12 months and more than tripled after that period ended, on a two year contract.

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

  • icon
    Boneman69 (profile), 7 Nov 2018 @ 12:12pm

    Numbers are full of fluff.

    I'd like to see how many people would drop if Comcast and the cableco's didn't force us to keep the cable channels by making Cable TV + Broadband packages cheaper than stand alone broadband packages. I'll bet it would be triple the loss.

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

  • icon
    ECA (profile), 7 Nov 2018 @ 12:14pm

    OR..

    do the same as others have done..
    MS, Apple, GE, the major banks, and others..
    Buy the competition up..
    Control the distribution.
    Use the service, break it up, or Under price your service, give away product...and the company cant survive, then Raise your prices again..as there is NO COMPETITION..

    If the other company is Big enough, Make a deal with them. Non-competitive contracts..

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

  • identicon
    JOHN NEMESH, 7 Nov 2018 @ 12:18pm

    Price isn't the only issue...

    They also need to compete by using less compression (trashing the picture quality...content looks FAR better on Amazon or Netflix, even at 1080p than the 1080i/highly compressed Xfinity crap).

    Most importantly, they need to decide if their revenue is coming from subscriptions or commercial advertising. I REFUSE to pay for ad infested video streams! If you want to advertise, provide the channel for free...if you want my MONEY, then I want ad-free content! You can't have it both ways!

    Finally, they need to compete by putting their content on a streaming app that is available on most major brand TVs and set top boxes like Apple TV and Roku. The need to lease a power hungry box with obsolete technology is a dealbreaker! Give me the content, where I want to watch it, on the devices I want to watch them on, and where I want to watch it without restriction.

    They won't do any of this, however, so I will continue to keep my cord cut.

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

  • identicon
    Anonymous Coward, 7 Nov 2018 @ 12:48pm

    Meet the new bill....same as the old bill.

    If the internet is a utility then censorship by its backbone should be as illegal as it is for the phone companies to do it.

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

    • identicon
      Anonymous Coward, 7 Nov 2018 @ 1:08pm

      Re:

      There is just more profit for both sides if we actually do not do that. Obtuse and complex laws are required to make the sheeple think they accomplished something without really changing that much. It's part of the "do something" generation that ultimately never did anything.

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

    • identicon
      Anonymous Coward, 7 Nov 2018 @ 1:51pm

      Re:

      Eavesdropping too.

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

      • identicon
        Anonymous Coward, 7 Nov 2018 @ 2:04pm

        Re: Re:

        It is not eavesdropping. It is "sending data back to servers for marketing purposes and to facilitate a better user experience".

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

  • identicon
    Anonymous Coward, 8 Nov 2018 @ 6:21am

    would you rather

    Would you rather have
    -lower cable/ISP pricing
    or
    -more local cable/ISP competition (like being able to choose between all of the cable/ISPs in each major US city--like you choose between different gas stations and different grocery stores in most US cities)

    I'd rather have more local cable/ISP competition.

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

    • icon
      That One Guy (profile), 8 Nov 2018 @ 6:32am

      False dichotomy

      That's not an either/or question, as the latter would almost inevitably lead to the former thanks to competition. If you have more options you are almost certain to also have lower prices, as the companies try to convince you to sign with them as opposed to someone else.

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

    • identicon
      Anonymous Coward, 8 Nov 2018 @ 11:21am

      Re: would you rather

      I'd rather have more local cable/ISP competition.

      Without local loop unbundling, that is a dream. Installing parallel infrastructure to enter a market is very expensive, and stopped by price competition unless the competitor is a huge corporation.

      You only need to note, that now the technologies have converged to digital, DSL is being abandoned where cable exists.

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

  • identicon
    Lesliie, 8 Nov 2018 @ 6:46am

    Cut yesterday - throttled immediately

    I turned in 2 cable boxes (@10.00 a piece each month)to optimum yesterday and I was not the only one - almost everyone coming in the door had a box or 2 in hand!!! However, I have a new fight my internet speed immediately dropped to a crawl from 87.27 to 31.39!

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

    • identicon
      Anonymous Coward, 8 Nov 2018 @ 8:42am

      Re: Cut yesterday - throttled immediately

      I would guess there is something in fine print that says you only get the higher speed in a package that includes the TV. Of course you can get back to what you had by paying more /s

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


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