Cable Execs Refuse To Offer Better TV Bundle Options Because Consumers Already Enjoy All The 'Value' They Can Handle

from the head-in-sand dept

Consumers have been clamoring for better cable TV pricing and more flexible channel options for the better part of the last decade, and for most of that time the broadcast and cable industry has been willfully — almost gleefully — ignoring them under the mistaken belief that the cable TV cash cow will live forever. With 2015 giving rise to a number of more flexible Internet video options, the conversation has heated up once again, leading to a very small number of companies (like Verizon) experimenting with modestly more flexible channel bundle packages where costly sports programming is broken out into its own tier.

However, the majority of cable TV executives remain with their heads planted squarely in the sand. When pressed on whether it would try to offer more consumer-friendly “skinny” channel bundles in response to consumer-driven industry trends, Time Warner Cable execs informed analysts recently that it would just be too confusing:

“There’s a lot of attraction in the press about skinny packages,” echoed Dinesh C. Jain, chief operating officer of Time Warner Cable. “I think a lot of the times, customers don’t want to get bogged down in a lot of choices to make on those kinds of things. There’s a lot of value in our triple-play packaging right now and it’s a simpler sale.”

Yes, you wouldn’t want to confuse the consumer by offering them something more competitive than you do now. And when calculating “value,” surely Time Warner Cable is including its excellent customer service, ranked worse than any other U.S. company in any industry? Time Warner Cable has been paying lip service to more flexible options since 2010 or before, yet they never seem to materialize. That’s in part thanks to broadcasters, whose programming rates continue to sail skyward utterly untethered from reason. But cable companies aren’t faultless; they raise rates wherever and whenever they can as well, whether that’s for DVR rentals, extra fees just to pay your bill in person, or sneaky below the line charges to covertly drive up the advertised rate.

At the cable industry’s Internet & Television Expo last week, cable executives again proclaimed they didn’t see the need for more flexible, cost-conscious cable lineups, because customers already get way more value than they can possibly handle:

“People have always had choice in what they buy in their subscription package,” declared Charter Communications CEO Tom Rutledge. “The vast majority of customers tend to take the larger bundle, and the reason is, it’s a damn good value,” said Time Warner Cable CEO Rob Marcus after allowing that “More flexibility is better.”

In other words, there’s no need to offer greater choice or value because we’re already really incredible at doing that. Except data across the board suggests that they aren’t.

A Reuters/Ipsos poll released concurrently with these execs’ comments found that 77% of U.S. adults say they’d prefer a la carte cable programming, a shift the industry has fought off for years by arguing it would kill niche channels (something that’s happening anyway) and raise rates (something that’s happening anyway). But it’s not just a la carte the cable industry has been resistant to; it’s any shift toward more compelling programming tiers. That same poll also found that 54% of consumers would like to be able to buy a core cable bundle that doesn’t include ESPN, and 47% don’t want cable news networks.

The cable and broadcast industry could work together to get out ahead of Internet video, but they’re absolutely terrified of offering any products that would cannibalize their traditional cable TV subscriber bases. They’re comforted by the fact that so many subscribers continue to pay an arm and a leg for bloated, expensive cable bundles, and believe that the giant pay TV fortress they’ve built will survive indefinitely. So like so many legacy industries, instead of meaningful, pre-emptive adaptation, the cable sector stands in the middle of the highway with a glassy eyed stare, confident in its resilience against the eighteen wheeler that bears down upon it.

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Companies: charter communications, comcast, time warner cable, verizon

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Comments on “Cable Execs Refuse To Offer Better TV Bundle Options Because Consumers Already Enjoy All The 'Value' They Can Handle”

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37 Comments
Violynnesays:

I’m going to defend cable here, but marginally.

It needs to be addressed cable “packages” are sold as they are because distributors control the pricing, not the cable industry.

This is important to understand, because ESPN will cost a fucking boatload compared to a station like Telemundo. Since the latter is “bundled” in current pricing schemes, this subsidizes the cost of having ESPN in the packages.

Everyone complains cable companies are raising our prices, but that’s further from the truth (in part). The showdown between distributors and cable operators (who must then “blackout” the signal(s)) is more proof than anyone needs this isn’t a cable issue.

Recently, Verizon started offering smaller bundles in its FioS offering, and it didn’t take long for distributors to rush to court, including ESPN, which charges an outrage price for its content of many different stations.

It’s pretty damn impossible to offer customer choices when distributors are calling the shots.

Anonymoussays:

Re:

That’s a great point. I spent some time the other evening chatting with a Comcast tech, who was repairing our local infrastructure for the Nth time (and commented on how awful previous repairs were) and his take on it was that most of us paying for bundles of channels never even bother looking at most of them: every household tends to watch a cluster of 10-30 depending on demographics.

For example, households with young kids but no sports fans are all over Nick et.al. but not ESPN et.al. Childless households with sports fans show the opposite pattern. Comcast knows a great deal about this thanks to their smart set-top boxes which track channel-minutes, but doesn’t want to unbundle channels because things like religious and shopping channels would be the first to go.

But we’d opt for it. Give us ESPN-everything plus NBC sports and Fox sports, plus about a dozen other assorted channels, and we’re good to go. (Don’t need cable news, don’t need the so-called “weather” channel, don’t need HBO/SHO etc., don’t need kid channels, don’t need much.)

WDSsays:

Re: Defending

There is plenty of blame to go around. While I think some (most? all?) of the disputes between content providers and the distributors are ridiculous, you don’t have to do much digging to find a whole lot of bloat on the bill that is strictly from the cable company.

For instance I can’t watch things on my DVR on my other TV, because they wanted to not only charge me a per month fee to turn on the feature on my DVR, but wanted to charge me a monthly network fee, that was basically charging me to allow them to send signal across my wire in my home network that both receivers were already connected to.

Both sides of the industry are trying their best to ignore the fact that the current method is going to change, it only remains to be seen who will be a part of it, and who will dry up and blow away, while crying the modern equivalent of “Why isn’t anyone buying my buggy whips?”

Karl Bodesays:

Re:

It needs to be addressed cable “packages” are sold as they are because distributors control the pricing, not the cable industry.

I dedicate a paragraph to that point.

Yes, broadcasters control programming prices, but don’t fall into the trap of thinking cable operators are helpless little daisies when it comes to raising rates. Take a look at the fees that smack you with below the line, the fees imposed for paying your bill in person, or the steep per month hardware rental rates.

There’s plenty of blame to go around. None of them want the cash cow to die.

John Fendersonsays:

"value" again, huh?

There?s a lot of value in our triple-play packaging right now and it?s a simpler sale.

There’s a lot of value for the cable companies. But for a lot of people (including myself), those triple-play packages have very little value. They cost a LOT and consist mostly of things that I don’t want. That’s the exact opposite of “a lot of value”.

Once again, companies, “value” is not a constant that can be computed. It’s completely subjective. Only your customers, each individually, can make the call for how much “value” you are offering.

HMTKStevesays:

ala carte

Ala carte already exists. It is called Hulu+ and Amazon. Whatever does not air next day on Hulu can be purchased on Amazon the next day. With the exception of sports and HBO there are very few reasons to buy cable TV. Kids are one exception but even there Netflix has plenty of back catalog for kid shows.

Anonymoussays:

A la carte

Just give me my local channels. I read recently that ESPN gets about $5 per subscriber per month, and the next highest channel (I forget what is was) is about $1.50 per subscriber, per month.

So, I should be able to get my local channels, PBS HD/Kids/Create/World/ABC/CBS/NBC for about $7 a month. I don’t care about any of the other channels, and I don’t really care that much about the ABC/NBC/CBS either.

PRMansays:

Re: A la carte

But that’s $5 and $1.50 if they charge EVERY subscriber. By breaking them up, you’re going to have to pay $5 for every network package. Your bill for just the channels you list would be about $30 a month.

If all you care about are the networks, then you should get a TV antenna and a DVR for that like a Tablo.

Anonymoussays:

I switched over to a skinny bundle with SlingTV and there is one problem I noticed and it’s the missing broadcast networks like FOX, NBC, CBS, ABC and PBS. I feel that these channels should be included with all skinny bundles. In my home, which is near SF, I can only get 2 of of the 30 channels that are over the airwaves due to the terrain. Don’t these channels get government assistance with their legacy broadcast rights? If that is the case, then there should be a requirement that they provide the channels for a nominal charge.

Anonymoussays:

Re:

I switched over to a skinny bundle with SlingTV and there is one problem I noticed and it’s the missing broadcast networks like FOX, NBC, CBS, ABC and PBS.

If you’re using a Roku, search for the Livestream channel. It’s got several network stations broadcast on it. Might not have stations local to you, but that would really only matter if you are trying to watch stuff like the local news.

PBS also has their own Roku channel.

Anonymoussays:

Cord cutting? I really seriously doubt it.

You want Hulu, HBO go, Netflix, any other service like that? Where does your Internet connection come from? Ummm, a cable company or Verizon. Cut all you like, but those guys still get your money. If everyone “cut cords” and their revenue dropped, they would just raise the price of Internet to maintain their revenue. Stream video through your phone service? Good luck with that.

Face it, there isn’t a whole lot that can be done in our current situation.

John Fendersonsays:

Re: Re: Re:

I doubt it. They are already charging the maximum amount they can for internet service. If they thought for a second that they could charge more without reducing overall revenue, they’d be doing it right now.

Also, even if they raised prices on internet service, they are extremely unlikely to raise them so much that you’d be paying what you paid for internet + cable TV.

There’s also the aspect of cable cutting that has nothing to do with money: trying to get away from doing business with cable companies to the greatest extent possible. If I had any internet option other than Comcast, for instance, I’d jump on it in a hot second.

(Disclaimer: I do subscribe to basic cable, because Comcast charges me less for basic cable + internet than for internet alone. I haven’t bothered to hook up the TV converter box, though.)

Lord Binkysays:

Technically, the arm up it's back IS a puppet's spine.

“The vast majority of customers tend to take the larger bundle, and the reason is, it?s a damn good value,?

Well done Sir, I for one wouldn’t be able to lie like that. The vast majority of customers may take the larger bundle, but none of them do it because of the price per channel value that you insinuate. It is because it is the only way to receive the select channels that are purposely kept tiered away, you and everyone else knows it. Just because they know they are getting screwed, don’t pretend like they enjoy it. It really makes you come off as someone who’d place second to a piece of bread in an IQ test.

Anonymoussays:

Denying that cable cutting is happening for a reason won’t help prolong it’s life span. Jacking up the prices will not be an alternative that will continue to be the answer. Speeding up the run to show more commercials has it’s end coming too.

Know what? Unless PPV gets in touch with what it’s customers want it doesn’t have a future either. The young crowd are not buying TVs for watch shows, they are gaming with them without the cable.

If PPV thinks it’s serving it’s customers well, the future isn’t going to need wearing sunglasses to see.

Stansays:

PRESS RELEASE from the Time Warner Burger Shack.

The Time Warner BS (Burger Shack) has announced a menu featuring new item choices. Customers will be able to order either

1) a basic burger (consisting of patty, bun and mayo) or

2) the big package burger (which adds mustard, relish, bacon, cream cheese, fried egg, mushrooms, lettuce. jalapenos and chili sauce)
and comes with fries, onion rings and a super-sized strawberry-rhubarb shake, or

3) a whole side of beef flame roasted to very-well-done.

Substitutions, additions or deletions are not allowed.

Said Dinesh C. Jain, chief operating officer of Time Warner BS: ?I think a lot of the times, customers don?t want to get
bogged down in a lot of choices to make on those kinds of things. There?s a lot of value in our triple-play packaging right now
and it?s a simpler sale.”

Davidsays:

Despite the fact that it’s still a scam, I’ll still grant that the exec’s comment about “too many choices” being a bad thing is a reasonable point. Look at the current Windows 10 SKU argument. With just 7 SKUs, each with a reasonably different target use, there are a ton of complaints about “why not just have 1 version and be done with it?”

There’s plenty of specific differences between the two situations that don’t make it a perfect comparison, but people will certainly complain about “too much” choice just as easily as they will about too little.

Consider the ‘ideal’ a la carte in cable: You have something like 200 channels, and when you sign up you need to select every individual one you want. How many people would be griping about going through all that hassle? Of not being aware that some obscure channel somewhere down the list is actually something they’re interested in? That they’re in a sort of “buy before you try” situation, where you don’t actually know exactly what each channel provides, and which ones you really want.

Even with the high-profile ones, out of a couple dozen ESPN channels, which ones actually carry the shows and sports that you, specifically, are interested in?

So, yeah, the company execs may be sticking their head in the sand about some aspects, but their critics are also ignoring a lot of the practicalities of implementing that for the average user.

John Fendersonsays:

Re:

” I’ll still grant that the exec’s comment about “too many choices” being a bad thing is a reasonable point.”

It can be, depending. But right now, they offer far too few choices.

“Look at the current Windows 10 SKU argument. With just 7 SKUs, each with a reasonably different target use, there are a ton of complaints about “why not just have 1 version and be done with it?””

In the case of Windows, the 7 SKUs are not that different. They could capture the important differences with 3. Lots of choices when there’s little difference between them is always a bad thing.

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